CNO Financial Group, Inc.s1.q4cdn.com/.../CNO_Financial_Proxy_2012.pdfCNO Financial Group, Inc....

CNO Financial Group, Inc.11825 North Pennsylvania Street

Carmel, Indiana 46032

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 9, 2012

NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of CNO Financial Group, Inc. (the“Company”), will be held at the CNO Conference Center, 11825 North Pennsylvania Street, Carmel, Indiana,at 8:00 a.m., Eastern Daylight Time, on May 9, 2012, for the following purposes:

1. To elect nine directors, each for a one-year term ending in 2013;

2. To approve the adoption of the Amended and Restated Section 382 Shareholders Rights Plan;

3. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independentregistered public accounting firm for 2012;

4. To cast a non-binding advisory vote to approve executive compensation; and

5. To consider such other matters, if any, as may properly come before the meeting.

Holders of record of outstanding shares of the common stock of the Company as of the close of businesson March 12, 2012, are entitled to notice of and to vote at the meeting. Holders of common stock have onevote for each share held of record.

In accordance with the rules of the Securities and Exchange Commission (the “SEC”), on or aboutMarch 30, 2012, we either mailed you a Notice of Internet Availability of Proxy Materials (“Notice”)notifying you how to vote online and how to electronically access a copy of this Proxy Statement and theCompany’s Annual Report to Shareholders (together referred to as the “Proxy Materials”) or mailed you acomplete set of the Proxy Materials. If you have not received but would like to receive printed copies of thesedocuments, including a proxy card in paper format, you should follow the instructions for requesting suchmaterials contained in the Notice.

Management and the Board of Directors respectfully request that (if you received a paper copy of theProxy Materials) you date, sign and return the enclosed proxy card in the postage-paid envelope so that wereceive the proxy card prior to the Annual Meeting, or, if you prefer, follow the instructions on your proxycard or Notice for submitting a proxy electronically or by telephone. If your shares are held in the name of abank, broker or other holder of record, please follow the procedures as described in the voting form they sendto you. If you attend the meeting in person you may withdraw your proxy and vote personally at the meeting.

By Order of the Board of Directors

Karl W. Kindig, Senior Vice President and Secretary

March 30, 2012Carmel, Indiana

TABLE OF CONTENTS

Page

Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Record Date and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Votes Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Securities Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Proposal 1 — Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Director Qualifications and Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Board Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Board Meetings and Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Board’s Role in Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Relationship of Compensation Policies and Practices to Risk Management . . . . . . . . . . . . . . . . . . . . . . . 13Approval of Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Corporate Governance Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Director Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Succession Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Communications with Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Copies of Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Report of the Human Resources and Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Summary Compensation Table for 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Grants of Plan-Based Awards in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Narrative Supplement to the Summary Compensation Table and the Grants of Plan-Based

Awards in 2011 Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Outstanding Equity Awards at 2011 Fiscal Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Option Exercises and Stock Vested in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Non-qualified Deferred Compensation in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Potential Payments Upon Termination or Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Proposal 2 — Adoption of the Amended and Restated Section 382 Shareholders Rights Plan . . . . . . 45Proposal 3 — Ratification of the Appointment of Our Independent Registered Public

Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Fees Paid to PricewaterhouseCoopers LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Pre-Approval Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Report of the Audit and Enterprise Risk Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Proposal 4 — Non-Binding Vote on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Shareholder Proposals for 2013 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Information Related to Certain Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

CNO Financial Group, Inc.11825 North Pennsylvania Street

Carmel, Indiana 46032

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors(the “Board”) of CNO Financial Group, Inc. (“CNO” or the “Company”) for the Annual Meeting ofShareholders (the “Annual Meeting”) to be held at the CNO Conference Center, 11825 North PennsylvaniaStreet, Carmel, Indiana on May 9, 2012, at 8:00 a.m., Eastern Daylight Time. We expect to send the Notice orthe Proxy Materials and proxy to shareholders on or about March 30, 2012.

Solicitation of Proxies

The proxies are solicited by the Board of Directors. Proxies may be solicited by mail, telephone,internet or in person. Proxies may by solicited by the CNO Directors and officers. All expenses relating to thepreparation and distribution to shareholders of the Notice, the Proxy Materials and the form of proxy are to bepaid by CNO.

If the form of proxy is properly executed and delivered in time for the Annual Meeting, the named proxyholders will vote the shares represented by the proxy in accordance with the instructions marked on the proxy.Each shareholder may appoint a person (who need not be a shareholder), other than the persons named in theproxy, to represent him or her at the Annual Meeting by properly completing a proxy. In either case, suchcompleted proxy should be returned in the envelope provided to you for that purpose (if you have requestedor received a paper copy of the Proxy Materials) for delivery no later than May 8, 2012. Proxies received thatare unmarked will be voted for each of the Board’s nominees for director (Proposal 1), for the adoption of theAmended and Restated Section 382 Shareholders Rights Plan (Proposal 2), for ratification of the appointmentof the Company’s independent registered public accounting firm (Proposal 3), and for approval of thecompensation paid to our Named Executive Officers (Proposal 4). A shareholder may revoke a proxy at anytime before it is exercised by mailing or delivering to CNO a written notice of revocation or a later-datedproxy, or by attending the Annual Meeting and voting in person.

Record Date and Voting

Only holders of record of shares of CNO’s common stock as of the close of business on March 12, 2012,will be entitled to vote at the Annual Meeting. On such record date, CNO had 242,323,054 shares of commonstock outstanding and entitled to vote at the Annual Meeting. Each share of common stock will be entitled toone vote with respect to each matter submitted to a vote at the Annual Meeting. The presence in person or byproxy of the holders of a majority of the outstanding shares of common stock entitled to vote at the AnnualMeeting is necessary to constitute a quorum.

On or about March 30, 2012, we either mailed you a Notice notifying you how to vote online and howto electronically access a copy of the Proxy Materials or mailed you a complete set of the Proxy Materials. Ifyou have not received but would like to receive printed copies of these documents, including a proxy card inpaper format, you should follow the instructions for requesting such materials contained in the Notice.

1

The following sets forth how a shareholder can vote over the Internet, by telephone or by mail:

Voting By Internet

If you hold your shares in street name (that is, if you hold your shares through a broker, bank or otherholder of record), you can vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the12-digit Control Number included on your Notice or your paper voting instruction form (if you received apaper copy of the Proxy Materials).

Voting By Telephone

If you hold your shares in street name, you can vote using a touch-tone telephone by calling the toll-freenumber included on your paper voting instruction form (if you received a paper copy of the Proxy Materials),24 hours a day, seven days a week. You will need the 12-digit Control Number included on your paper votinginstruction form.

If you hold your shares in street name, you may also submit voting instructions to your bank, broker orother holder of record. In most instances, you will be able to do this over the Internet, by telephone, or bymail. Please refer to the information from your bank, broker or other holder of record on how to submitvoting instructions.

The Internet and telephone voting procedures, which comply with Delaware law and the SEC rules, aredesigned to authenticate shareholders’ identities, to allow shareholders to vote their shares and to confirm thattheir instructions have been properly recorded.

Voting By Mail

If you have received a paper copy of the Proxy Materials by mail, you may complete, sign, date andreturn by mail the paper proxy card or voting instruction form sent to you in the envelope provided to youwith your Proxy Materials or voting instruction form.

Deadline for Submitting Votes By Internet, Telephone or Mail

If you hold your shares through a bank or brokerage account, proxies submitted over the Internet or bytelephone as described above must be received by 11:59 p.m., Eastern Daylight Time, on May 8, 2012.

Proxies submitted by mail should be returned in the envelope provided to you with your paper proxycard or voting instruction form, and must be received no later than May 8, 2012.

If you want to vote in person at the Annual Meeting and you hold your shares in street name, you mustobtain a legal proxy from your bank, broker or other holder of record authorizing you to vote. You must thenbring the legal proxy to the Annual Meeting.

Please note that you may receive multiple copies of the Notice or Proxy Materials (electronically and/orby mail). These materials may not be duplicates as you may receive separate copies of the Notice or ProxyMaterials for each type of account in which you hold shares. Please be sure to vote all of your shares in eachof your accounts in accordance with the directions on the proxy card(s) and/or voting instruction form(s) thatyou receive. In the case of duplicate votes for shares in a particular account, your last vote is the one thatcounts.

2

Votes Required

The election of each director (Proposal 1) will be determined by the vote of the majority of the votes cast(where the number of votes cast “for” a director exceeds the number of votes cast “against” that director) bythe holders of shares represented (in person or by proxy) and entitled to vote on the subject matter provided aquorum is present. The vote required to approve the adoption of the Amended and Restated Section 382Shareholders Rights Plan (Proposal 2), the ratification of the appointment of the Company’s independentregistered public accounting firm (Proposal 3) and the advisory vote to approve executive compensation(Proposal 4), and any other proposal properly brought before the Annual Meeting is the affirmative vote of amajority of the shares represented (in person or by proxy) and entitled to vote on the applicable subjectmatter. Abstentions from voting will have the same legal effect as voting against each proposal.

Abstentions and shares represented by “broker non-votes”, as described below, are counted as present andentitled to vote for the purpose of determining a quorum. A broker non-vote occurs if you hold your shares instreet name and do not provide voting instructions to your broker on a proposal and your broker does nothave discretionary authority to vote on such proposal. Under current New York Stock Exchange rules, yourbroker will not have discretionary authority to vote your shares at the Annual Meeting with respect to Proposal 1(election of nine directors as listed in this Proxy Statement), Proposal 2 (adoption of the Amended and RestatedSection 382 Shareholders Rights Plan) and Proposal 4 (advisory vote to approve executive compensation).“Broker non-votes” will have no effect on the outcome of these proposals. Your broker will have discretion tovote your uninstructed shares on Proposal 3 (ratification of the appointment of PricewaterhouseCoopers LLPas the Company’s independent registered public accounting firm for 2012).

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FORTHE SHAREHOLDER MEETING TO BE HELD ON MAY 9, 2012

This Proxy Statement (including all attachments), the Company’s Annual Report to Shareholders(which includes the Annual Report on Form 10-K for the year ended December 31, 2011, filed with theSecurities and Exchange Commission (“SEC”) on February 27, 2012) (which is not deemed to be part ofthe official proxy soliciting materials), and any amendments to the foregoing materials that are requiredto be provided to shareholders are available at www.proxyvote.com. Shareholders may obtain copies ofthe Proxy Statement, Annual Report to Shareholders and form of proxy relating to this or future meetings ofthe Company’s shareholders on our Internet website at www.CNOinc.com in the “Investors — SEC Filings”section, by calling 317-817-2893 or by sending the Company an email at [email protected]. For directions tothe Company’s 2012 Annual Meeting, please call us at 317-817-2893.

3

SECURITIES OWNERSHIP

The following table sets forth certain information concerning the beneficial ownership of our commonstock as of March 12, 2012 (except as otherwise noted) by each person known to us who beneficially ownsmore than 5% of the outstanding shares of our common stock, each of our directors and nominees, each ofour current executive officers that are named in the Summary Compensation Table on page 35 and all of ourcurrent directors, nominees and executive officers as a group. Shares of our common stock subject to optionsthat are currently exercisable or exercisable within 60 days of March 12, 2012 are deemed to be outstandingand to be beneficially owned by the person holding the options for the purpose of computing the percentageownership of that person or group of persons but are not treated as outstanding for the purpose of computingthe percentage ownership of any other person.

Shares Beneficially Owned

Title of Class Name of Beneficial Owner Number Percentage

Common stock Paulson & Co. Inc.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,498,496 9.7%Common stock Columbia Wanger Asset Management, LLC(2) . . . . . . . . . . . 20,372,000 8.3Common stock Dimensional Fund Advisors LP (3) . . . . . . . . . . . . . . . . . . . . . . . 19,352,893 8.0Common stock Edward J. Bonach(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745,976 *Common stock Ellyn L. Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — *Common stock Robert C. Greving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,652 *Common stock R. Keith Long(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,330,565 *Common stock Charles W. Murphy(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — *Common stock Neal C. Schneider(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,111 *Common stock Frederick J. Sievert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,652 *Common stock Michael T. Tokarz(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,372 *Common stock John G. Turner(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,372 *Common stock Eric R. Johnson(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559,681 *Common stock Scott R. Perry(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654,646 *Common stock Steven M. Stecher(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443,630 *Common stock All directors and executive officers as a group

(17 persons)(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,435,907 2.6

* Less than 1%.

(1) Based solely on the Schedule 13F filed with the SEC on February 14, 2012 by Paulson & Co. Inc. Thebusiness address for Paulson & Co. Inc. is 1251 Avenue of the Americas, New York, NY 10020.

(2) Based solely on Amendment No. 7 to Schedule 13G filed with the SEC on February 10, 2012 byColumbia Wanger Asset Management, LLC. The Amendment No. 7 to Schedule 13G reports sole powerto vote or direct the vote of 20,022,000 shares and sole power to dispose or direct the disposition of20,372,000 shares. The business address for Columbia Wanger Asset Management, LLC is 227 WestMonroe Street, Suite 3000, Chicago, IL 60606.

(3) Based solely on Amendment No. 1 to Schedule 13G filed with the SEC on February 13, 2012 byDimensional Fund Advisors LP. The Amendment No. 1 to Schedule 13G reports sole power to vote ordirect the vote of 18,912,326 shares and sole power to dispose or direct the disposition of 19,352,893shares. The business address for Dimensional Fund Advisors LP is Palisades West, Building One, 6300Bee Cave Road, Austin, TX 78746.

(4) Includes options, exercisable currently or within 60 days of March 12, 2012, to purchase 331,500 sharesof common stock.

(5) Includes 133,465 shares held directly by Mr. Long, 859,100 shares of common stock owned by OtterCreek Partners I, LP and 1,338,000 shares of common stock owned by Otter Creek International Ltd.

4

Mr. Long is the majority stockholder of Otter Creek Management, Inc., the general partner of Otter CreekPartners I, LP, and by virtue of such ownership Mr. Long has the power to vote and dispose of the sharesheld by Otter Creek Partners I, LP and therefore may be deemed to be the beneficial owner of thoseshares. Otter Creek Management, Inc., as an investment advisor of Otter Creek International Ltd., may bedeemed to be the beneficial owner of shares held by Otter Creek International Ltd. Mr. Long expresslydisclaims beneficial ownership of the shares held by Otter Creek International Ltd.

(6) Mr. Murphy is employed by Paulson & Co. Inc., which has internal policies that do not allowMr. Murphy to personally own shares of our common stock.

(7) Includes options, exercisable currently or within 60 days of March 12, 2012, to purchase 15,400 shares ofcommon stock.




(11) Includes options, exercisable currently or within 60 days of March 12, 2012, to purchase an aggregate of2,272,180 shares of common stock held by directors and executive officers.

5

PROPOSAL 1

ELECTION OF DIRECTORS

Nine individuals will be elected to the Board at the Annual Meeting for one-year terms expiring at the2013 annual meeting of shareholders. Each nominee listed below other than Ellyn L. Brown is currently amember of the Board. All directors will serve until their successors are duly elected and qualified.

Director Qualifications and Experience

In considering candidates for the Board, the Governance and Strategy Committee reviews the experience,skills, attributes and qualifications of the current Board members and other potential candidates to ensure thatthe Board has the skills and experience to properly oversee the interests of the Company. In doing so, theGovernance and Strategy Committee considers the experience, skills, attributes and qualifications of candidatesin these areas:

• Insurance and financial services industry;

• Accounting or other financial management;

• Investments;

• Legal and regulatory;

• Actuarial;

• Management including service as a chief executive officer or manager of business units or functions;

• Talent management; and

• Experience as a director of other companies.

The key experiences, skills, qualifications and skills of each of the nominees are included in their individualbiographies below.

Consideration is also given to each nominee’s independence, financial literacy, personal and professionalaccomplishments and experience in light of the needs of the Company. For incumbent directors, pastperformance on the Board and contributions to their respective committees are also considered. TheGovernance and Strategy Committee and the Board seek directors with qualities that will contribute to thegoal of having a well-rounded, diverse Board that functions well as a unit and is able to satisfy its oversightresponsibilities effectively. The Governance and Strategy Committee expects each of the directors to haveproven leadership, sound judgment, high ethical standards and a commitment to the success of the Company.

The Governance and Strategy Committee does not have a specific diversity policy with respect to Boardcandidates, but it strongly believes that the Board should have a variety of differences in viewpoints, professionalexperiences, educational background, skills, race, gender and age, and considers issues of diversity andbackground in its process of selecting candidates for the Board.

Board Nominees

The Governance and Strategy Committee engaged a third-party search firm to identify, assist in theevaluation of, and recommend potential Board candidates. After considering the candidates identified throughthat process, the Governance and Strategy Committee recommended that Ms. Brown be a nominee for electionto the Board at the Annual Meeting.

Should any of the nominees become unable to accept election, the persons named in the proxy will havethe right to exercise their voting power in favor of such person or persons as the Board may recommend. All ofthe nominees have consented to being named in this Proxy Statement and to serve if elected. The Board knowsof no reason why any of its nominees would be unable to accept election.

6

The Governance and Strategy Committee will consider candidates for director nominees put forward byshareholders. See “Shareholder Proposals for 2013 Annual Meeting” for a description of the advance noticeprocedures for shareholder nominations for directors.

Set forth below is information regarding each person nominated by the Board for election as a director.

Nominees for Election as Directors:

Edward J. Bonach, 58, has been chief executive officer and a director sinceOctober 1, 2011 and served as chief financial officer of the Company from May2007 until January 2012. Mr. Bonach joined CNO from National Life Group, wherehe served as executive vice president and chief financial officer. Before joiningNational Life in 2002, he was with Allianz Life for 23 years, where his positionsincluded President — Reinsurance Division and chief financial officer. He is aFellow of the Society of Actuaries, a member of the American Academy ofActuaries, and a Chartered Enterprise Risk Analyst. With respect to Mr. Bonach’snomination, the Board and the Governance and Strategy Committee considered hisexperience as chief executive officer and chief financial officer of the Company andhis extensive insurance, actuarial and executive management experience.

[photo not available] Ellyn L. Brown, 62, has been nominated to join the Board, effective at the AnnualMeeting. Until her retirement from full-time law practice, Ms. Brown practicedcorporate and securities law, most recently as principal of Brown & Associates, aboutique law and consulting firm that provided operations, regulatory andgovernance services to financial services industry clients and other clients thatoperated in heavily regulated, high-scrutiny environments. Ms. Brown has been amember of the board of directors of NYSE Euronext, Inc. (and predecessor entities)since 2005, and also is a member of the board of NYSE Regulation, the entity thatoversees NYSE market regulation. She is also a member of the board of directors ofWalter Investment Management Corp. Ms. Brown has served as a governor of theFinancial Industry Regulatory Authority since 2007 and served from 2007-2011 as atrustee of the Financial Accounting Foundation, the parent entity of the FinancialAccounting Standards Board and the Governmental Accounting Standards Board.With respect to Ms. Brown’s nomination, the Board and the Governance andStrategy Committee considered her extensive financial industry, legal and regulatoryexperience.

Robert C. Greving, 60, joined our Board in May 2011. Mr. Greving is the retiredexecutive vice president, chief financial officer and chief actuary for Unum Group,having held those positions from 2005 to 2009. Mr. Greving also served aspresident of Unum International Ltd., Bermuda. Before becoming executive vicepresident and chief financial officer of Unum Group in 2003, he held senior vicepresident, finance, and chief actuary positions with Unum Group and with TheProvident Companies, Inc., which merged with Unum Group. His duties prior toretirement included directing all aspects of the finance and actuarial responsibilitiesfor the corporate and nine insurance subsidiary insurance companies of UnumGroup. He previously held senior positions with PennCorp Dallas Operations,Southwestern Life Insurance Company, American Founders Insurance Company,Aegon USA and Horace Mann Life Insurance Company during his 35 years in theinsurance industry. He is a Fellow of the Society of Actuaries. With respect toMr. Greving’s nomination, the Board and the Governance and Strategy Committeeconsidered his extensive experience with the management of companies in the life,health, disability and annuity lines of business and in particular with the actuarial,financial and investment disciplines.

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R. Keith Long, 63, joined our Board in May 2009. Mr. Long founded Otter CreekManagement, Inc. in 1991 and since that date has served as its president and chiefexecutive officer. Otter Creek Management, Inc. is the investment advisor for twohedge funds, Otter Creek Partners I, LP and Otter Creek International Ltd. Mr. Longhas 35 years of experience in investment analysis in both fixed income and equities.His experience prior to founding Otter Creek Management, Inc. includes 10 years asa fixed income analyst, trader and arbitrageur, and eight years as an equity portfoliomanager. His previous employers include Morgan Stanley, Kidder Peabody,Tradelink, Mesirow Financial and Lionel Edie & Co. He is the former chairman ofthe board of Financial Industries, Inc., a life insurance company, and the formerchairman of Financial Institutions, Inc., a property and casualty insurance company.With respect to Mr. Long’s nomination, the Board and the Governance and StrategyCommittee considered his extensive investment experience and prior experience inthe insurance industry.

Charles W. Murphy, 51, joined our Board in February 2010. Mr. Murphy is a Partnerof Paulson & Co. Inc. and an Analyst responsible for the Insurance and AssetManagement Sectors since May 2009. Mr. Murphy began his career in 1985 atGoldman Sachs in the Corporate Finance Department and joined the FinancialInstitutions Group in 1987, working on advisory and capital raising assignments,primarily in the insurance sector. He moved to Morgan Stanley in 1990 where hebecame a Managing Director in 1995 and Co-Head of the European FinancialInstitutions Group from 1996 to 2000. After eighteen months as the chief financialofficer of a venture capital investment firm, Mr. Murphy served as Co-Head ofEuropean Financial Institutions for Deutsche Bank from 2001 to 2005 and Co-Headof the European Financial Institutions Group for Credit Suisse from 2005 to 2007.From June 2007 to December 2008, he worked at Fairfield Greenwich Group. Withrespect to Mr. Murphy’s nomination, the Board and the Governance and StrategyCommittee considered his extensive financial and investment experience.

Neal C. Schneider, 67, joined our Board in September 2003. Mr. Schneider servedfrom 2003 until 2010 as the non-executive chairman of the board of PMA CapitalCorporation, whose subsidiaries provide insurance products, including workers’compensation and other commercial property and casualty lines of insurance, aswell as fee-based services. He also served on the executive, audit and governancecommittees for PMA Capital. Until his retirement in 2000, Mr. Schneider spent 34years with Arthur Andersen & Co., including service as partner in charge of theWorldwide Insurance Industry Practice and the North American Financial ServicePractice. Between 2000 and 2002, he was an independent consultant and between2002 and 2003, Mr. Schneider was a partner of Smart and Associates, LLP, abusiness advisory and accounting firm. Mr. Schneider has been a certified publicaccountant since 1970. With respect to Mr. Schneider’s nomination, the Board andthe Governance and Strategy Committee considered his extensive knowledge andexperience in accounting and financial matters, particularly with respect to insurancecompanies, and in corporate governance.

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Frederick J. Sievert, 64, joined our Board in May 2011. Mr. Sievert is the retiredPresident of New York Life Insurance Company, having served in that positionfrom 2002 through 2007. Mr. Sievert shared responsibility for overall companymanagement in the Office of the Chairman, from 2004 until his retirement in 2007.Mr. Sievert joined New York Life in 1992 as senior vice president and chieffinancial officer. In 1995 he was promoted to executive vice president and waselected to the New York Life board of directors in 1996. Prior to joining New YorkLife, Mr. Sievert was a senior vice president for Royal Maccabees Life InsuranceCompany, a subsidiary of the Royal Insurance Group of London, England.Mr. Sievert is a Fellow of the Society of Actuaries. He has been a director ofReinsurance Group of America, Incorporated since 2010. With respect toMr. Sievert’s nomination, the Board and the Governance and Strategy Committeeconsidered his extensive insurance, actuarial and executive management experience.

Michael T. Tokarz, 62, joined our Board in September 2003. Mr. Tokarz is thechairman of MVC Capital, Inc. (a registered investment company). In addition, he hasbeen a managing member of the Tokarz Group, LLC (venture capital investments)since 2002. He was a general partner with Kohlberg Kravis Roberts & Co. from 1985until he retired in 2002. He is a senior investment professional with over 30 years oflending and investment experience including diverse leveraged buyouts, financings,restructurings and dispositions. Mr. Tokarz has served on the boards of publicly tradedcompanies for over 20 years and during the last five years has served as a directorof Dakota Growers Pasta Companies, Inc. (2004–2010), MVC Capital, Inc.(2004–present), Mueller Water Products, Inc. (2006–present), Idex Corporation(1987–present) Walter Energy, Inc. (2006–present) and Walter InvestmentManagement Corp. (2009–present). Mr. Tokarz is a certified public accountant. Withrespect to Mr. Tokarz’s nomination, the Board and the Governance and StrategyCommittee considered his extensive knowledge and executive management experiencein banking and finance, investments and corporate governance.

John G. Turner, 72, joined our Board in September 2003. He launched HillcrestCapital Partners, a private equity investment firm, in 2002 and has beenits chairman since that date. During his 50-year career in the insurance industry,Mr. Turner served as chairman and chief executive officer of Reliastar FinancialCorp. from 1991 until it was acquired by ING in 2000. After the acquisition, hebecame vice chairman and a member of the executive committee of ING Americasuntil his retirement in 2002. Mr. Turner served as a director of Hormel FoodsCorporation from 2000 to 2011, a director of Shopko Stores, Inc. from 1999 to2005 and a director of ING funds from 2000 to 2007. Mr. Turner is a Fellow of theSociety of Actuaries and a member of the American Academy of Actuaries. Withrespect to Mr. Turner’s nomination, the Board and the Governance and StrategyCommittee considered his extensive insurance industry, executive management,investment management, actuarial and regulatory experience.

Voting for Directors; Required Vote

The election of each director will be determined by the vote of the majority of the votes cast (where thenumber of votes cast “for” a director exceeds the number of votes cast “against” that director) by the holdersof shares of common stock present in person, or represented by proxy, and entitled to vote on the proposal atthe Annual Meeting.

In an uncontested election of directors at which a quorum is present, any incumbent director who fails toreceive a majority of the votes cast (where the number of votes cast “for” a director exceeds the number ofvotes cast “against” that director) shall offer to tender his or her resignation to the Board. In such event, the

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Governance and Strategy Committee will consider the offer and make a recommendation to the Board whetherto accept or reject the resignation or whether other action should be taken. The Board will publicly discloseits decision and rationale within 90 days from the certification of the election results.

Recommendation of our Board of Directors

OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTIONTO THE BOARD OF EACH OF THE COMPANY’S DIRECTOR NOMINEES LISTED ABOVE.

Board Committees

Audit and Enterprise Risk Committee. The Audit and Enterprise Risk Committee’s functions, amongothers, are to recommend the appointment of independent accountants; review the arrangements for and scopeof the audit by the independent accountants; review the independence of the independent accountants; considerthe adequacy of the system of internal accounting controls and review any proposed corrective actions; reviewand monitor the Company’s compliance with legal and regulatory requirements; and discuss with managementand the independent accountants our draft annual and quarterly financial statements and key accounting and/orreporting matters. The Audit and Enterprise Risk Committee currently consists of Mr. Greving, Mr. Long andMr. Schneider, with Mr. Greving serving as chairman of the committee. Based on their experience, Mr. Grevingand Mr. Schneider each qualify as an “audit committee financial expert,” as defined under SEC rulespromulgated under the Sarbanes-Oxley Act. All current members of the Audit and Enterprise Risk Committeeare “independent” within the meaning of the regulations adopted by the SEC and the listing requirementsadopted by the New York Stock Exchange regarding audit committee membership. The current members alsosatisfy the financial literacy qualifications of the New York Stock Exchange listing standards. The committeemet on 11 occasions in 2011. A copy of the Audit and Enterprise Risk Committee’s charter is available on ourwebsite at www.CNOinc.com.

Governance and Strategy Committee. The Governance and Strategy Committee is responsible for, amongother things, establishing criteria for Board membership; considering, recommending and recruiting candidates tofill new positions on the Board; reviewing candidates recommended by shareholders; considering questions ofpossible conflicts of interest involving Board members, executive officers and key employees; and consideringcorporate strategy including significant acquisitions or divestitures. It is also responsible for developing principlesof corporate governance and recommending them to the Board for its approval and adoption, and reviewingperiodically these principles of corporate governance to insure that they remain relevant and are being compliedwith. The Governance and Strategy Committee currently consists of Mr. Tokarz, Mr. Schneider and Mr. Sievert,with Mr. Tokarz serving as chairman of the committee. All current members of the Governance and StrategyCommittee are “independent” within the meaning of the listing requirements adopted by the New York StockExchange regarding nominating committee membership. The committee held four meetings during 2011. A copyof the Governance and Strategy Committee’s charter is available on our website at www.CNOinc.com.

Human Resources and Compensation Committee. The Human Resources and Compensation Committeeis responsible for, among other things, approving overall compensation philosophy and strategy; evaluating theperformance of the chief executive officer and recommending to the Board the compensation of the chiefexecutive officer; reviewing and approving on an annual basis the evaluation process and compensationstructure for the Company’s other executive officers as recommended by the chief executive officer; ensuringthat appropriate programs and procedures are established to provide for the development, selection, retentionand succession of officers and key personnel; and reviewing and administering our incentive compensationand equity award plans. The report of the Human Resources and Compensation Committee appears on page34 of this Proxy Statement. The Human Resources and Compensation Committee currently consists ofMr. Turner, Mr. Sievert and Mr. Tokarz, with Mr. Turner serving as committee chair. All current members ofthe Human Resources and Compensation Committee are “independent” within the meaning of the listingrequirements adopted by the New York Stock Exchange regarding compensation committee membership and

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qualify as “non-employee” directors for purposes of Rule 16b-3 of the Securities Exchange Act of 1934 andas “outside directors” for purposes of Section 162(m) of the Internal Revenue Code. The committee met on 11occasions in 2011. A copy of the Human Resources and Compensation Committee’s charter is available on ourwebsite at www.CNOinc.com.

Investment Committee. The Investment Committee is responsible for, among other things, reviewinginvestment policies, strategies and programs; reviewing the procedures which the Company utilizes indetermining that funds are invested in accordance with policies and limits approved by it; and reviewing thequality and performance of our investment portfolios and the alignment of asset duration to liabilities. TheInvestment Committee currently consists of Mr. Bonach, Mr. Long, Mr. Murphy and Mr. Turner, withMr. Long serving as chairman of the committee. The committee met on four occasions in 2011. A copy ofthe Investment Committee’s charter is available on our website at www.CNOinc.com.

Executive Committee. Subject to the requirements of applicable law, including our certificate ofincorporation and bylaws, the Executive Committee is responsible for exercising, as necessary, the authority ofthe Board in the management of our business affairs during intervals between Board meetings. The ExecutiveCommittee currently consists of Mr. Bonach, Mr. Schneider and Mr. Greving, with Mr. Schneider serving aschairman of the committee. The committee met on two occasions in 2011. A copy of the ExecutiveCommittee’s charter is available on our website at www.CNOinc.com.

Director Compensation

Our non-employee directors currently receive an annual cash retainer of $75,000, with the exception ofMr. Murphy, who has declined any director fees. Our non-executive chairman receives a fee equal to 175% ofthe base cash fees and equity awards paid to the other non-employee directors. The chairs of the Audit andEnterprise Risk Committee and the Human Resources and Compensation Committee each currently receive anadditional annual cash fee of $30,000, and directors who chair one of our other Board committees receive anadditional annual cash fee of $20,000. Each member of the Audit and Enterprise Risk Committee (includingthe chairman) receives an additional annual cash retainer of $15,000. Cash fees are paid quarterly in advance.In addition to the cash payments, our non-employee directors currently receive $75,000 in annual equityawards, which vest immediately upon grant. The Board’s policy is to review and set the compensation of thenon-employee directors each year at the Board meeting that follows the Annual Meeting and to make equityawards to those directors at that time. Directors are reimbursed for out-of-pocket expenses, including first-class airfare, incurred in connection with the performance of their responsibilities as directors. Thecompensation paid in 2011 to our non-employee directors is summarized in the table below:

DIRECTOR COMPENSATION IN 2011

Name

Feesearned or

paid incash(1)

Stockawards(2) Total

Robert C. Greving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102,940 $ 74,996 $177,936R. Keith Long . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,184 74,996 182,180Charles W. Murphy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0Neal C. Schneider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,274 131,243 277,517Frederick J. Sievert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,552 74,996 141,548Michael T. Tokarz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,437 74,996 169,433John G. Turner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000 74,996 179,996Donna A. James(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,077 0 8,077R. Glenn Hilliard(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,135 0 14,135Debra J. Perry(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,538 0 11,538

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(1) This column represents the amount of cash compensation paid in 2011 for Board service, for service asNon-Executive Chairman, for service on the Audit and Enterprise Risk Committee and for chairing acommittee, as applicable.

(2) The amounts in this column are computed in accordance with Financial Accounting Standards BoardAccounting Standards Codification Topic 718 (“ASC 718”) and represent the grant date fair values forshares of common stock awarded on May 12, 2011. Mr. Schneider received an award of 16,891 sharesof common stock on that date and each of the other listed directors (other than Mr. Murphy) received anaward of 9,652 shares of common stock. These awards vested immediately upon grant.

The directors had the following number of options outstanding at December 31, 2011 — Mr. Schneider(15,400), Mr. Tokarz (15,400) and Mr. Turner (15,400). The average exercise price for the options heldby the directors is $20.22.

(3) Retired from the Board effective May 12, 2011, the date of our 2011 Annual Meeting.

Board Leadership Structure

CNO has a non-executive, independent director, who serves as chairman of the Board. Mr. Schneider waselected Chairman in 2011 and currently serves in that capacity. The Board believes that its leadershipstructure, with a non-executive chairman position separate from the chief executive officer, providesappropriate, independent oversight of management and the Company. The non-executive chairman of theBoard (1) presides at all meetings of the Board and shareholders; (2) presides during regularly held sessionswith only the independent directors; (3) encourages and facilitates active participation of all directors; (4)develops the calendar of and agendas for Board meetings in consultation with the chief executive officer andother members of the Board; (5) determines, in consultation with the chief executive officer, the informationthat should be provided to the Board in advance of the meeting; and (6) performs any other duties requestedby the other members of the Board.

As discussed below, all members of our Board are independent other than Mr. Bonach, our chiefexecutive officer. As CEO, Mr. Bonach, subject to the direction of the Board, is in charge of the business andaffairs of CNO and is our chief policy making officer. Our Board and its committees play an active role inoverseeing the Company’s business. The directors bring a broad range of leadership, business and professionalexperience to the Board and actively participate in Board discussions. The Board believes that having a non-executive chairman and a Board comprised almost entirely of independent, non-employee directors best servesthe interests of our shareholders and the Company.

Board Meetings and Attendance

During 2011, the Board met on nine occasions. Each director attended at least 75% of the aggregate ofthe meetings of the Board and Board committees on which he served. The independent directors regularlymeet in executive session without the chief executive officer or any other member of management. The non-executive chairman presides at such executive sessions.

In addition, CNO has a policy that all directors attend the annual meeting of shareholders. All of ourdirectors attended the annual meeting of shareholders held in 2011.

Director Independence

The Board annually determines the independence of directors based on a review by the directors.Although the Board has not adopted categorical standards of materiality for independence purposes, nodirector is considered independent unless the Board has determined that he or she has no material relationship

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with CNO, either directly or as an officer, shareholder or partner of an organization that has a materialrelationship with CNO. Material relationships can include commercial, industrial, banking, consulting, legal,accounting, charitable and familial relationships, among others. The Board considers the New York StockExchange guidelines in making its determination regarding independence and the materiality of anyrelationships with CNO. Under the New York Stock Exchange corporate governance standards, a director isnot independent if he or she has been an employee or executive officer of the Company within the last threeyears. The Board has determined that all current directors other than Mr. Bonach are independent.

Board’s Role in Risk Oversight

Enterprise risk management is integral to our business. The Board is responsible for overseeing theCompany’s risk profile and management’s processes for managing risk. The oversight of certain risks,including those relating to the Company’s capital structure and capital management is done by the full Board.The Board has delegated primary responsibility for many aspects of the Board’s risk oversight to the Auditand Enterprise Risk Committee. The Audit and Enterprise Risk Committee receives reports at its meetings andoversees management’s processes for managing enterprise risk, including the risk management processassociated with financial controls, insurance reserves, legal, regulatory and compliance risks, and the overallrisk management structure, process and function. Other Board committees oversee risk management related tospecific functions. The Investment Committee oversees investment and asset-liability management risk. TheHuman Resources and Compensation Committee oversees risks associated with our compensation programsso that incentives are not provided for inappropriate risk taking, as further discussed below.

Our leadership strongly supports an active and engaged risk management process. CNO has establishedan enterprise risk management committee comprised of senior management from business units and functionsthroughout the Company. This enterprise risk management committee meets at least once each quarter and isco-chaired by the chief executive officer and the chief financial officer. The Company has a vice presidentwho is responsible for the coordination of enterprise risk management activities. Reports on different aspectsof the Company’s enterprise risk management are provided to the Board, to the Audit and Enterprise RiskCommittee and to other Board committees, as appropriate, on a regular basis.

As part of its risk oversight responsibilities, the Board and its committees review policies and processesthat senior management uses to manage the Company’s risk exposure. In doing so, the Board and itscommittees review the Company’s overall risk function and senior management’s establishment of appropriatesystems and processes for managing insurance risk, interest rate and asset-liability management risk, creditand counterparty risk, liquidity risk, operational risk and reputational risk.

Relationship of Compensation Policies and Practices to Risk Management

The Human Resources and Compensation Committee has reviewed our compensation programs andbelieves that they carefully balance risks and rewards and do not incentivize inappropriate risk taking. Ourincentive plans include multiple performance measures, most of which are financial in nature, and aredesigned to hold employees accountable for sustained improvement in the core operating performance ofthe Company. We structure our pay to include both fixed and variable compensation and our variablecompensation is capped at no more than two times the target opportunities. In addition, our officers’compensation aligns them with shareholder interests through equity-based awards with multiple year vesting.

Approval of Related Party Transactions

Transactions and agreements with related persons (directors, director nominees and executive officersor members of their immediate families, or shareholders owning five percent or more of the Company’soutstanding stock) that meet the minimum threshold for disclosure in the proxy statement under applicableSEC rules (generally transactions involving amounts exceeding $120,000 in which a related person has a

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direct or indirect material interest) must be approved by the Board or a committee comprised solely ofindependent directors. In considering the transaction or agreement, the Board or committee will consider allrelevant factors including the business reason for the transaction, available alternatives on comparable terms,actual or apparent conflicts of interest and the overall fairness of the transaction to the Company. Anyproposed transactions that might be considered a related person transaction are to be raised with the chairmanof the Board or the chairman of the Governance and Strategy Committee. They will jointly determine whetherthe proposed transaction should be considered by the full Board (recusing any directors with conflicts) or by aBoard committee of independent directors. Related person transactions are to be approved in advancewhenever practicable, but if not approved in advance are to be ratified (if the Board or committee considers itappropriate to do so) as soon as practicable after the transaction.

Various Company policies and procedures, including the Code of Business Conduct and Ethics andannual questionnaires completed by all company directors, officers and employees, require disclosure oftransactions or relationships that may constitute conflicts of interest or otherwise require disclosure underapplicable SEC rules. Any related person transactions that are identified under these additional policies andprocedures are to be considered under the process described above.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that applies to all officers, directors andemployees regarding their obligations in the conduct of the Company’s affairs. A copy of the Code of BusinessConduct and Ethics is available on our website at www.CNOinc.com. Within the time period specified, and to theextent required, by the SEC and the New York Stock Exchange, we will post on our website any amendment toour Code of Business Conduct and Ethics and any waiver applicable to our principal executive officer, principalfinancial officer or principal accounting officer (there have been no such waivers).

Corporate Governance Guidelines

CNO is committed to best practices in corporate governance. Upon the recommendation of theGovernance and Strategy Committee, the Company adopted a set of Board Governance Operating Guidelines.A copy of the CNO Board Governance Operating Guidelines is available on our website at www.CNOinc.com.

Director Stock Ownership Guidelines

The Board has adopted guidelines regarding ownership of CNO common stock by the directors. Theseguidelines provide for each director to own shares of common stock with a value of at least three times theirannual base cash compensation, and directors are given five years from the date of their initial election toreach that level of ownership. Based on the current base cash compensation for directors of $75,000 per year,the ownership guidelines call for each director to own shares with a value of at least $225,000. As of March 12,2012, all directors who have served on the Board for at least five years met these stock ownership guidelines.

Succession Planning

The Board is actively involved with the Company’s talent management process. Annually, the Boardreviews the Company’s leadership team, which includes a detailed discussion of succession plans for the chiefexecutive officer and other members of executive and senior management. In addition, the Board regularlydiscusses the Company’s plans for talent development, with a focus on high potential individuals who are inthe position to make the most significant contributions to the Company and to serve as its future leaders.

Communications with Directors

Shareholders and other interested parties wishing to communicate directly with the Board or any one ormore individual members (including the chairman of the Board or the non-management directors as a group)are welcome to do so by writing to the CNO Corporate Secretary, 11825 North Pennsylvania Street, Carmel,

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Indiana, 46032. The Corporate Secretary will forward any communications to the director or directorsspecified by the shareholder or other interested party.

Compensation Committee Interlocks and Insider Participation

During 2011, directors who served on the Human Resources and Compensation Committee included thecurrent members (Messrs. Turner, Sievert and Tokarz), Ms. James and Ms. Perry. None of the members of theHuman Resources and Compensation Committee during 2011 is or has been one of our officers or employees.None of our executive officers serves, or served during 2011, as a member of the board of directors orcompensation committee of any entity that has one or more executive officers serving on our Board or HumanResources and Compensation Committee.

Copies of Corporate Documents

In addition to being available on our website at www.CNOinc.com, we will provide to any person,without charge, a printed copy of our committee charters, Code of Business Conduct and Ethics and BoardGovernance Operating Guidelines upon request being made to CNO Investor Relations, 11825 N.Pennsylvania Street, Carmel, Indiana 46032; or by telephone: (317) 817-2893 or email: [email protected].

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

CNO Financial Group, Inc. is a Fortune 1000 insurance holding company, with more than $4 billion inannual revenues. CNO’s insurance companies are leading providers of supplemental health insurance, lifeinsurance and annuities to working American families and seniors.

CNO delivered very positive financial results in 2011. Net operating income* was up 19% over theprevious year, driven in part by increases in our Bankers Life and Other CNO Business segments. Theconsolidated statutory risk-based capital ratio of our insurance subsidiaries increased 26 percentage pointsto 358%, and book value per common share, excluding accumulated other comprehensive income (loss),*increased to $18.26 from $16.28. Our results were achieved despite several external factors and internalfactors impacting our ability to deliver on our performance goals. In 2011, the capital markets experiencedlow interest rates, and this is a trend that may continue for the near- and intermediate-term. Like otherinsurance companies, our financial performance is impacted by low-interest rates. Sustained low rates impactinvestment income, new sales of annuities, and assessments of reserve adequacy. In terms of our balancesheet, in 2011 we pre-paid $50 million of our senior secured credit agreement, amended our senior securedcredit agreement to allow for more flexibility and a reduced rate, and began buying back stock under a $100million share repurchase plan.

Organizational changes impacted the compensation of three of our Named Executive Officers in 2011.Our Chief Executive Officer, James Prieur, retired in 2011, and Edward Bonach, who had served as our ChiefFinancial Officer since 2007, became CEO on October 1. Scott Perry, President of Bankers Life, was promotedto the additional position of Chief Operating Officer in July. The next sections address the compensation of theNamed Executive Officers other than Mr. Prieur, whose 2011 compensation is addressed in a separate section.

Our mission is to be a premier provider of life insurance, supplemental health products and annuities toAmerica’s middle-income consumers with a focus on the retirement ages, while providing value to ourshareholders. We believe that our focus on middle-income families and retirees will position us favorably tocapitalize on the future growth in these markets. We believe we can accomplish this mission through theeffective execution of the following strategies:

• remain focused on the needs of our retirement age and middle income market customers;

• expand and improve the efficiency of our distribution channels;

• seek profitable growth;

• pursue operational efficiencies and cost reduction opportunities;

• continue to manage and where possible reduce the risk profile of our business;

• effectively deploy excess capital; and

• develop and incentivize our management team to ensure that we retain the executive talent needed toachieve our strategic objectives.

We highlight below a number of key actions and decisions with respect to our executive compensationprograms taken in 2011 to support our compensation objectives.

* For a definition of net operating income and for reconciliations of this measure to the correspondingmeasure under generally accepted accounting principles (“GAAP”), see “Information Related to CertainNon-GAAP Financial Measures” on page 54 of this Proxy Statement.

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Summary of Key Actions, Decisions and Results in 2011

v Utilized a one-time restricted stock grant for retention of key executive talent: Three of the NamedExecutive Officers were awarded a special restricted stock grant to retain critical skills.

v Resumed merit (base salary) increases for the majority of officers (vice president level and above),including the Named Executive Officers: Reflecting general market trends, the Human Resources andCompensation Committee (the “Committee”) decided to award base salary increases to three of the fiveNamed Executive Officers in 2011.

v Reintroduced Operating ROE as a metric for the Washington National (“WN”) business segment forAnnual Cash Incentive Plan. This action followed our decision in 2010 to split the former ConsecoInsurance Group segment into Washington National, a growing business which markets and distributessupplemental health and life insurance products, and Other CNO Business, which is comprisedprimarily of products we no longer sell actively.

v Continued to include a mix of stock options, performance shares and restricted stock: Prior to 2010,our annual equity grant consisted of stock options and performance shares (P-Shares). Beginning withthe 2010 equity grant, we provided restricted shares in addition to stock options and P-Shares. Theaddition of restricted shares in the annual equity grant was intended to promote retention and tobalance the mix of our equity vehicles; however, the performance-related vehicles (stock options andP-Shares) still constitute a majority of the annual equity grant.

v Chief Financial Officer appointed Chief Executive Officer: Mr. Bonach was appointed CEO, effectiveOctober 1, 2011. He received commensurate adjustments to his base pay and annual incentive targetand maximum opportunities, which were prorated for the months served as CEO. Additionalinformation can be found in the Compensation of Chief Executive Officer on page 30.

v Created Chief Operating Officer position: Mr. Perry, President of Bankers Life, was promoted tothe additional role of Chief Operating Officer, effective July 6, 2011. He received a base pay increasecommensurate with the expanded scope of the position and the term of his employment agreement wasextended for three years.

v Changed the treatment upon retirement for the annual incentive program (Pay for Performance or“P4P”) and LTI program consistent with competitive compensation practices: We changed thetreatment of equity and P4P awards upon retirement to provide for continued vesting of equity awardsand pro rata payment of P4P awards for those who voluntarily terminate their employment on or afterage 62 years (or age 60 with 10 years of employment with CNO).

v Strong 2011 P4P results: Driven by strong financial results of the Company and our operating segments,including a 17% increase in net operating income per diluted share, P4P payouts ranged from 121% to172% of target for the Named Executive Officers.

v 2009-2011 P-Shares not earned: At the end of the performance period (December 31, 2011), theperformance goals for the 2009-2011 P-Share grant were not achieved. Accordingly, no P-Sharesvested from this grant.

v These key actions, decisions and results delivered the following compensation for our NamedExecutive Officers in 2011:

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NEO Compensation Resulting from Key 2011 Actions and Decisions

Named Executive Officer

January 1,2011

Base Salary

Merit(Base

Salary)Increase

December 31,2011Base

Salary(1) 2011 P4P(2)RetentionAward(3)

LTI AwardValue(4)

Edward Bonach, Chief Executive Officerand Chief Financial Officer (5) . . . . . . . $510,000 7.8% $800,0000 $1,043,276 $898,860 $1,008,359

Scott Perry, Chief Operating Officerand President — Bankers Life . . . . . . . . $441,324 7.6% $ 525,000 $ 798,160 $601,350 $ 878,952

Eric Johnson, President — 40|86Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500,000 0% $ 500,000 $ 857,562 $ — $ 878,952

Steven Stecher, President —Washington National . . . . . . . . . . . . . . . . . $412,000 3.2% $ 425,000 $ 511,454 $297,510 $ 878,952

(1) Mr. Bonach’s base salary was increased from $550,000 to $800,000 upon his promotion to CEO effectiveOctober 1, 2011, and Mr. Perry’s base salary was increased from $475,000 to $525,000 upon hispromotion to COO effective July 6, 2011.

(2) P4P, or “Pay for Performance”, is our annual management cash incentive plan.

(3) Provided in the form of restricted shares, expressed here in terms of grant date fair value. These grantswere made on January 31, 2011.

(4) Expressed as the grant date fair value of stock options, performance shares and restricted shares made inMarch 2011.

(5) Mr. Bonach’s 2011 P4P opportunity increased from 100% to 125% of his base salary when he assumedthe role of CEO on October 1, 2011 consistent with the opportunity provided to the previous CEO.

Summary of Compensation Governance Practices

The Committee strives to maintain good governance standards in our compensation practices. They include:

v Implemented Stock Ownership Guidelines: In May 2011, the Committee approved stock ownershipguidelines for the Chief Executive Officer and the senior executive officers who report to him.

v No significant perquisites offered: Our executives participate in broad-based Company-sponsoredbenefits programs on the same basis as other full-time associates.

v Change in control agreements are governed by double trigger arrangements: All employmentagreements and equity award agreements for Named Executive Officers and other senior executivesrequire a termination of employment in addition to a change in control of the Company before changein control benefits are triggered.

v No Supplemental Executive Retirement Programs (SERPs) offered: We do not offer SERPs to ourcurrent executives.

v Independence of executive compensation consultant: The executive compensation advisor to theCommittee continues to meet the SEC’s requirements for independence. Aon Hewitt does not provideany compensation-related services to management and had no prior relationship with our ChiefExecutive Officer or other Named Executive Officers.

v Independence of Committee Members: All Committee members are independent.

v Percent of Variable and Performance-Based Pay: Variable pay comprises between 68% and 75% ofTotal Direct Compensation (as described below) for our Named Executive Officers, with the majorityof variable pay coming in long-term incentives.

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v Continued to utilize a “Governor” in the Annual Incentive Plan: In 2011, we continued a policyadopted in 2009 which limits P4P payments on non-income-related metrics when we do not achieveoverall threshold operating earnings.

v Strong Clawback Rights: Our P4P and LTI plans have clawback provisions that include recapture rightsof any incentive amount paid or vested in the event that the Committee determines that theachievement of performance goals was based on incorrect data.

v Assessing level of risk: The Committee annually assesses the level of risk associated with our incentiveplans.

v Ongoing succession planning: The Committee regularly engages throughout the year in in-depthdiscussions regarding succession planning and talent development of our executives.

Philosophy, Objectives and Role of Human Resources and Compensation Committee

Philosophy

The Committee, which is comprised solely of independent, non-employee Directors, has developeda philosophy and a comprehensive compensation and benefits strategy to reward overall and individualperformance that drives long-term success for our shareholders.

Our compensation philosophy consists of the following guiding principles:

v Pay for Performance: Rewards will vary based on company, business segment and individualperformance.

v Target Total Rewards Position: The overall rewards will be competitive by targeting compensation atapproximately the median of the relevant comparator group with additional compensation for achievingsuperior performance.

v Relevant Comparator Group: We will utilize a relevant comparator group of companies in theinsurance/financial services industry and general industry where appropriate, taking both asset size andrevenue into consideration, which includes the best available data for comparison with our peers andcompanies with which we compete for executive talent.

Pay for Performance Objectives

The Committee strives to provide a clear reward program that allows us to attract, incentivize and retainseasoned executive talent with the significant industry experience required to continue to improve ourperformance and build long-term shareholder value. To achieve this, our programs are designed to:

v Reward sustainable operational and productivity improvements. This means that (1) we set performancegoals under our P4P plan at targeted performance levels for key financial metrics and (2) we set multi-year performance goals for our P-Share (performance share) awards;

v Align the interests of our executives with those of our shareholders by rewarding shareholder valuecreation;

v Integrate with the Company-wide annual performance management program of goal setting and formalevaluation;

v Provide for discretion to make adjustments and modifications based upon how well individual associatesmeet our performance standards for expected achievement of business results, as well as uphold ourvalues and critical behaviors; and

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v Offer the opportunity to earn above-market compensation when overall and individual performancesexceed expectations.

Target Total Rewards and Selection of the Comparator Groups

In setting target executive compensation opportunities, our Committee looks at Total Annual Cash (whichis comprised of base salary and target cash incentives) and Total Direct Compensation (which is the sum ofTotal Annual Cash and long-term incentives). Our long-term incentives may include annual stock optionawards as well as restricted shares and P-Share awards. The Committee intends to compensate our executivesat approximately the 50th percentile (meaning within a range of +/- 15% of the 50th percentile dollar value)for total compensation, for the achievement of target performance, with additional compensation opportunitiesfor the achievement of superior results.

The Committee assesses “competitive market” compensation annually using a number of sources.Historically, the Company has used the suite of surveys from Towers Watson and compared our executives tothe Insurance/Financial Services Industry participants with assets between $15–$60 Billion, the GeneralIndustry participants with revenues between $2–$8 Billion and the Life Office Management Associate(LOMA) Executive Survey participants. We continued to use these surveys in 2011. In addition, indetermining the compensation for the new CEO and COO, at the recommendation of the independentcompensation consultant, the Committee elected to begin reviewing targeted proxy data from a select group ofpeer companies identified below for the Named Executive Officers and also comparing our other executives tothe Diversified Insurance Study published by Towers Watson. Both of these sources provide a much morefocused analysis of very specific industry peers with whom the Company competes for talent. We willcontinue to use our peer companies for the Named Executive Officers as the relevant comparator group andall other executives will be compared to the Towers Watson Diversified Industry Study in 2012.

Peer Companies:

American Financial Group, Inc. Principal Financial Group, Inc.Assurant, Inc. Protective Life CorporationCincinnati Financial Corporation Reinsurance Group of America IncorporatedDelphi Financial Group, Inc. StanCorp Financial Group, Inc.Genworth Financial, Inc. Torchmark CorporationHCC Insurance Holdings, Inc. Universal American Corp.Kemper Corporation Unum GroupLincoln National Corporation

Although aggregate pay levels are generally consistent with our compensation philosophy, it is possiblethat pay levels for specific individuals may be above or below the targeted competitive benchmark levelsbased on a number of factors, including each individual’s role and responsibilities within our Company, theindividual’s experience and expertise, the pay levels for peers within the Company, and the pay levels forsimilar job functions in the marketplace. The Committee is responsible for approving all compensationprograms for our senior executive officers. In determining executive compensation, the Committee considersall forms of compensation and benefits, and uses appropriate tools — such as tally sheets and market studies— to review the value delivered to each executive through each component of compensation.

Tally sheets provide a vehicle for the Committee to examine external market practices and compare themto our internal evaluations and decisions. Our tally sheets capture and report:

v Competitive external market data on a base salary, Total Annual Cash and Total Direct Compensationbasis;

v Individual Total Annual Cash compensation including annual salary, target bonus opportunity, andactual bonus paid;

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v Long-term equity grants and their vesting status and value at a hypothetically established share price; and

v Employment agreement terms and conditions.

Competitive market data is used as a reference point, and we avoid automatic adjustments based on annualcompetitive benchmarking data, since we believe a given executive’s compensation should also reflect Company-specific factors such as the relative importance of the role within the organization, the compensation for otherpositions at the same level, and individual factors such as experience, expertise, and individual performance.

In addition to the objective review of external factors, the Committee also considers internal equity amongcolleagues when determining executive compensation levels. This means that, although the Committee examinescompetitive pay data for specific positions, market data is not the sole factor considered in setting pay levels.The Committee also considers factors such as our organizational structure and the relative roles andresponsibilities of individuals within that structure. The Committee believes that this approach fosters anenvironment of cooperation among executives that improves sales growth, profitability and customer satisfaction.

Realized total compensation in any year may be significantly above or below the target compensationlevels depending on whether our incentive goals were attained and whether shareholder value was created. Insome cases, the amount and structure of compensation results from negotiations with executives at the timethey were hired, which may reflect competitive pressures to attract and hire quality executive talent in theinsurance industry. To help attract and retain such talent, the Committee also seeks to provide a level ofbenefits in line with those of comparable publicly traded companies without matching such benefits itemby item.

Role of the Human Resources and Compensation Committee

The Committee determines the components and amount of compensation for our executive officers andprovides overall guidance for our employee compensation policies and programs. In addition, the Committeeactively monitors our executive development and succession planning activities related to our senior executivesand other members of management. Currently, there are three members of our Board of Directors who sit on theCommittee, each of whom is an independent director under the New York Stock Exchange listing requirements,the exchange upon which our stock trades. From time to time, other Board members may also participate in theCommittee’s meetings. The full Board of Directors receives regular reports of Committee deliberations anddecisions and, at least once annually, the full Board reviews the Committee’s written evaluation of the ChiefExecutive Officer’s performance evaluation and compensation. The Committee’s functions are more fullydescribed in its charter, which can be found on our website at www.CNOinc.com.

In making executive compensation decisions, the Committee receives advice from its independentcompensation consultant, Aon Hewitt. As an independent consultant, any services performed by Aon Hewittfor our Company are at the Committee’s direction. Aon Hewitt did not have a prior relationship with the ChiefExecutive Officer or any of our executive officers at the time the Committee initially engaged Aon Hewitt inOctober 2008. Other than its services to the Committee, Aon Hewitt does not provide any other compensation-related services to our management.

Although Aon Hewitt is retained directly by the Committee, Aon Hewitt personnel interact with ourexecutive officers as needed, specifically the Chief Executive Officer, Executive Vice President of HumanResources, Executive Vice President and General Counsel, and Chief Financial Officer, and their staffs toprovide the Committee with relevant compensation and performance data for our executives and the Company.In addition, Aon Hewitt personnel may interact with management to confirm information, identify dataquestions, and/or exchange ideas.

As requested by the Committee, Aon Hewitt’s services to the Committee in 2011 included:

v Providing competitive analysis of total compensation components for our senior executive officers,including our Named Executive Officers;

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v Researching competitive and emerging compensation practices;

v Attending Committee meetings, in person and telephonically;

v Reviewing and evaluating changes to the executive compensation philosophy and proposed planchanges; and

v Assisting with the assessment of the risk taking incentives of our compensation plans.

In making its decisions, the Committee collects and considers input from multiple sources. TheCommittee may ask senior executive officers to attend Committee meetings where executive compensation,overall and individual performance are discussed and evaluated. During these meetings, executives provideinsight, suggestions or recommendations regarding executive compensation. Deliberations generally occur withinput from Aon Hewitt, members of management and other Board members. However, only the members ofthe Committee make decisions regarding executive compensation. In the case of Chief Executive Officercompensation, these decisions are submitted to the full Board for its review and approval.

The Compensation Committee reviewed the results of the shareholder vote on the Say on Pay proposalfrom the 2011 Annual Meeting, at which approximately 89% of the votes cast were for approval of theCompany’s 2010 executive compensation as described last year’s proxy statement. After consideration of thepositive voting results and its discussion with Aon Hewitt, the Committee determined that its approach tocompensation is balanced and effective and made no fundamental changes to the program for fiscal year 2011.

Compensation Components

Our compensation program is composed of the following components:

v Base salary;

v Annual cash incentives (P4P);

v Long-term equity incentives (stock options, P-Shares and restricted shares); and

v Benefits.

Table 1 summarizes information about the target level of 2011 Total Annual Cash (TAC) and Total DirectCompensation (TDC) for our Named Executive Officers. This table differs from the Summary CompensationTable on page 35 in that values generally represent target amounts and equity grants which are part of ournormal long-term incentive program for 2011 only. Further discussion about these compensation componentscan be found later in this section. Each component is discussed with a brief description of the strategy, plandesign and plan performance. This table does not reflect the grant date fair values of the special retentionrestricted share awards granted in 2011, details of which can be found in the “Special Retention Awards”section below.

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Table 1 — Summary of Components of TDC in 2011(1)

Named Executive OfficerBase

Salary

TargetIncentive

(% of Salary)Target TotalAnnual Cash

Stock OptionValue(2)

P-ShareValue(2)

R-ShareValue(2)

Total LTIValue(2) TDC(3)

Edward Bonach, Chief ExecutiveOfficer and Chief Financial Officer . . $800,000(5) 125%(6) $1,457,288 $541,943 $233,208 $233,208 $1,008,359 $2,465,647% Change vs. 2010(4) . . . . . . . . . . . . 57% 43% –6% 18%% of TDC . . . . . . . . . . . . . . . . . . . . . . 32% 59% 41%

Scott Perry, Chief Operating Officerand President — Bankers Life &Casualty . . . . . . . . . . . . . . . . . . . . . . . $525,000(7) 100% $1,019,354 $471,576 $203,688 $203,688 $ 878,952 $1,898,306% Change vs. 2010(4) . . . . . . . . . . . . 19% 15% –15% –1%% of TDC . . . . . . . . . . . . . . . . . . . . . . 28% 54% 46%

Eric Johnson, President — 40|86Advisors . . . . . . . . . . . . . . . . . . . . . . . $500,000 100% $1,000,000 $471,576 $203,688 $203,688 $ 878,952 $1,878,952% Change vs. 2010(4) . . . . . . . . . . . . 0% 0% 27% 11%% of TDC . . . . . . . . . . . . . . . . . . . . . . 27% 53% 47%

Steven Stecher, President —Washington National InsuranceCompany . . . . . . . . . . . . . . . . . . . . . . . $425,000 100% $ 848,005 $471,576 $203,688 $203,688 $ 878,952 $1,726,957% Change vs. 2010(4) . . . . . . . . . . . . 3% 3% –2% 0%% of TDC . . . . . . . . . . . . . . . . . . . . . . 25% 49% 51%

(1) Annual Incentive expressed as Target levels, value of equity expressed as grant date fair value.

(2) Represents stock option, performance share and restricted share grant date fair values made duringthe annual grant; actual value earned will depend on stock price appreciation and achievement ofperformance metrics at time of vesting. Valuation methodology is discussed later in this document.

(3) TDC includes Target TAC and the value of equity provided at the time of the annual grant.

(4) The 2011 mix of equity vehicles remained the same from 2010 with stock options, P-Shares andrestricted shares.

(5) Base salary reflects a merit increase awarded in February 2011 as well as a promotional increase inOctober 2011.

(6) Target Incentive reflects role as Chief Executive Officer.

(7) Base salary reflects a merit increase awarded in February 2011 as well as a promotional increase inJuly 2011.

Compensation Mix

In delivering compensation to our Named Executive Officers, the mix of pay is heavily weighted tovariable, performance-based pay (currently between 68% and 75% of TDC, with the majority of variable paycoming in long-term incentives) with base salary comprising a relatively small portion of TDC (between 25%and 32%) for the Named Executive Officers. The focus of the pay mix on variable pay elements continues tosupport our objectives of pay for performance and shareholder value creation.

Base Salaries

Strategy

In establishing base salaries, the Committee begins by targeting the 50th percentile of the competitivemarket and adjusts upwards or downwards as appropriate to reflect each position’s responsibilities and eachindividual’s experience level, unique skills or competencies. Base salaries generally range from the 25th

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percentile (for recently promoted employees or those who otherwise lack experience) to the 75th percentile(for high performers with significant industry experience) of the competitive market data. Annual reviews ofexecutives’ base salaries consider numerous factors, including:

v Job responsibilities;

v Impact on the development and achievement of our strategic initiatives;

v Competitive labor market pressures;

v Company performance for the prior 12 months;

v Individual performance for the prior 12 months, as expressed in the executive’s performance review; and

v Salaries paid for comparable positions within our relevant comparator group.

No specific weighting of these factors is used. However, given our desire for a performance-basedculture, the Committee’s use of discretion generally results in increases for our top performers and little or noincreases in base salary for average or lower performing employees.

2011 Merit Increases

Based on Company performance, a review of general trends, and an analysis of positioning relative to thecomparator market data the Committee awarded cash base salary increases to three of the Named ExecutiveOfficers in addition to most of the other executives in February 2011. Mr. Bonach received an increase of7.8%, Mr. Perry received an increase of 7.6% and Mr. Stecher received an increase of 3.2% due to theirrespective individual performances and contributions and the market data for their respective positions.

The Board appointed Mr. Perry to the position of Chief Operating Officer of the Company in addition tohis role as President of Bankers Life. On August 16, 2011, the Committee approved an increase to Mr. Perry’sbase annual salary from $475,000 to $525,000 effective July 6, 2011, the date of his appointment. No equitygrants were awarded for his appointment to Chief Operating Officer.

The Board appointed Mr. Bonach to the position of Chief Executive Officer effective October 1, 2011and increased his base annual salary from $550,000 to $800,000. Further discussion on the increase isincluded under Compensation of the Chief Executive Officer on page 31.

Annual Cash Incentives

Strategy

Our annual incentive plan, the “Pay for Performance” Plan (P4P), is designed to focus on and rewardachievement of annual performance goals. It is the broadest of our management incentive programs, coveringour Named Executive Officers and other key employees. All participants in the P4P plan, including our NamedExecutive Officers, are assigned target incentive opportunities expressed as a percentage of base salary.

2011 Pay for Performance (P4P) Plan Design

During February 2011, the Committee reviewed the P4P plan design for 2011 in order to ensurealignment between shareholder and participant interests, to keep senior executives focused on the financialperformance of the enterprise, to improve alignment with financial metrics that participants influence and toselect operational/business metrics that drive financial success. This review was accomplished by focusing onthe selection of appropriate performance metrics and the determination of performance levels which wouldcontribute to financial success. As a result of this review, most performance metrics and weightings remainedthe same, except that Operating Return on Equity for the Washington National business segment (EarningsBefore Interest and Taxes less Washington National’s proportional share of corporate expense and interest on

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debt, after tax) was reintroduced. Additional metrics which continued to be part of 2011 incentive plansapplicable to Named Executive Officers include:

v Operating Earnings Per Share (EPS), defined as net operating income, after taxes and preferred stockdividends but excluding the impact of realized gains/losses, divided by the diluted average numberof shares outstanding. The Committee believes Operating EPS is a key measure of our operatingperformance, is less impacted by the volatility of the market and is directly impacted by managementduring the calendar year.

v Combined and Business Segment Earnings Before Interest and Taxes (EBIT), where Combined EBIT isa corporate roll-up of individual business segment EBIT. In the Committee’s view, this metric enhancesline of sight for our operating management and increases their focus on improving the longer-term coreprofitability of our operations.

v Combined and Business Segment Value of New Business (VNB), which calculates the present value ofexpected profits from product sales. The selection of VNB is based on the Committee’s desire to havean increased focus on growing the economic value of sales from the most profitable products asopposed to top-line sales.

v Combined Operating Expense, which is the total amount of expense incurred to operate the businessexcluding claims costs and benefits paid to policyholders. The selection of this metric represents theCommittee’s belief that managing operating expenses contributes to our long-term profitability andoperating efficiency.

v Business Segment Operating ROE, which is net operating income (EBIT less each segment’sproportional share of corporate expenses and interest on debt, after tax) divided by GAAP Equity. Thismetric represents the Committee’s desire to encourage efficient use of capital at the business segmentlevel.

v GAAP Yield, which is period investment income (net of expenses), divided by average invested assetsfor the same period.

v GAAP Investment Income, which is the income earned on general account invested assets, net ofexpenses.

Limiting the number of metrics to no more than four for any individual participant enhances thesimplicity and effectiveness of the P4P plan. The program is designed to pay additional compensation whenthe Company achieves superior performance.

Our plan design rewards a threshold level of financial performance which corresponds to 25% of targetpayout; target level of performance which provides 100% of target payout; and a maximum level ofperformance and payout of 200% of target. Any payout between these financial performance goals isdetermined through straight line interpolation between the appropriate levels of performance. Consistent withour compensation philosophy, target annual incentive levels are established to generate Total Annual Cashcompensation at competitive market median levels. Further, in 2011, we continued a policy that the thresholdlevel of performance for combined EBIT must be achieved before there can be any above-target payouts withrespect to other financial and operational metrics. This policy limits incentive payments on non-income-relatedmetrics when threshold operating earnings are not achieved by the enterprise.

Although we have a large net operating loss carry-forward (as a result of our emergence from bankruptcyin 2003), the Committee continues to administer the P4P and long-term incentive plans so that paymentsqualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code. However,the Committee does reserve the right to make discretionary awards that do not qualify as “performance-basedcompensation” under Section 162(m) to the extent it deems it necessary or advisable to do so.

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Change to Treatment of Retirement

Based on the independent consultant review of competitive compensation practices, effective September 30,2011 the Committee approved changes to the treatment of P4P awards upon retirement. For this purpose,“Retirement” means voluntary termination of employment after achieving either (a) 62 years of age or (b) 60years of age with at least 10 years of employment with the Company. Those who voluntarily terminate underthese conditions after September 30, 2011, will receive a pro rata portion of any pay for performance award(based on the number of days from the beginning of the performance period until the date of Retirementdivided by the total number of days in the performance period) and, to the extent the performance criteria aremet, such pro rata amount will paid at the same time as others receive payments under such P4P award. Priorto the approved change, there were no pro rata payments for any pay for performance award upon retirement.We believe that this new policy will help attract mid-career hires and makes the treatment of compensation atretirement more competitive with peer companies.

Table 2 summarizes the 2011 financial metrics and weightings for our Named Executive Officers underthe P4P plan:

Table 2 — Summary of 2011 P4P Metrics and Weightings for Named Executive Officers

Named Executive Officer Metric — Weighting Metric — Weighting Metric — Weighting Metric — Weighting

Edward Bonach . . . Operating EPS — 50% CombinedEBIT — 20%

Combined OperatingExpense — 15%

Combined Value ofNew Business — 15%

Scott Perry(1) . . . . . Combined EBIT — 40% BankersROE — 20%

Bankers OperatingEBIT — 20%

Bankers Value ofNew Business — 20%

Scott Perry(2) . . . . . Combined EBIT — 40% OperatingEPS — 20%

Bankers OperatingEBIT — 20%

Bankers Value ofNew Business — 20%

Eric Johnson . . . . . . Operating EPS — 50% GAAPYield — 25%

GAAP InvestmentIncome — 25%

Steven Stecher . . . . Combined EBIT — 40% WN ROE — 20% WN OperatingEBIT — 20%

WN Value ofNew Business — 20%

(1) P4P Metrics and Weighting in Mr. Perry’s role as President, Bankers Life from January 1 — July 5, 2011

(2) P4P Metrics and Weighting in Mr. Perry’s role as Chief Operating Officer and President, Bankers Lifefrom July 6 — December 31, 2011

Table 3 provides a summary of 2011 performance targets for our Named Executive Officers under theP4P plan.

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Table 3 — Summary of 2011 P4P Performance Targets and Actual Results for Named Executive Officers

Performance TargetsMetric Threshold Target Maximum

YE ActualResults

CorporateOperating EPS . . . . . . . . . . . . . . . . . . . . . . $ 0.62 $ 0.68 $ 0.73 $ 0.76Combined EBIT . . . . . . . . . . . . . . . . . . . . $ 325.0 MM $ 378.9 MM $ 416.8 MM $ 419.4 MMCombined Operating Expense . . . . . . . . $ 616.7 MM $ 587.3 MM $ 557.9 MM $ 595.1 MMCombined Value of New Business . . . . $ 65.0 MM $ 76.4 MM $ 84.0 MM $ 68.0 MM

Bankers LifeROE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5% 10.6% 12.7% 12.2%Operating EBIT . . . . . . . . . . . . . . . . . . . . $ 250.4 MM $ 278.2 MM $ 333.8 MM $ 327.2 MMValue of New Business . . . . . . . . . . . . . . $ 44.5 MM $ 52.4 MM $ 60.3 MM $ 45.1 MM

Washington NationalROE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1% 9.0% 10.8% 8.4%Operating EBIT . . . . . . . . . . . . . . . . . . . . $ 90.0 MM $ 100.0 MM $ 120.0 MM $ 99.2 MMValue of New Business . . . . . . . . . . . . . . $ 11.8 MM $ 13.1 MM $ 15.1 MM $ 12.4MM

40|86 AdvisorsGAAP Yield . . . . . . . . . . . . . . . . . . . . . . . . 5.80% 5.95% 6.10% 6.02%GAAP Investment Income . . . . . . . . . . . $1,251.0 MM $1,317.4 MM $1,383.0 MM $1,341.9 MM

Table 4 provides the threshold, target and maximum payouts for each of our Named Executive Officersunder the P4P plan.

Table 4 — Summary of 2011 P4P Opportunities for Named Executive Officers

Named Executive OfficerThreshold Payout(as % of Salary)

Target Payout(as % of Salary)

MaximumPayout

(as % of Salary)

Edward Bonach(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 200%Edward Bonach(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.25% 125% 250%Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 200%Eric Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 200%Steven Stecher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 200%

(1) P4P Opportunity for Mr. Bonach in his role as Chief Financial Officer from January 1 — September 30, 2011.

(2) P4P Opportunity for Mr. Bonach in his role as Chief Executive Officer from October 1 — December 31,2011. Mr. Bonach’s opportunity is higher to reflect competitive norms for the Chief Executive Officerposition.

2011 P4P Plan Performance

As reported, financial results yielded aggregate performance ranging from 121% to 172% of target forNamed Executive Officers. All P4P metric results achieved the threshold level of performance, with themajority of them achieving more than the target level of performance.

Table 5 sets forth the actual bonuses earned for 2011 by our Named Executive Officers pursuant to ourP4P plan.

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Table 5 — 2011 P4P Actual Bonuses

Named Executive Officer Amount

Edward Bonach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,043,276Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 798,160Eric Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 857,562Steven Stecher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511,454

Long-Term Equity Incentives

Design and Strategy

The Committee uses long-term equity incentives to balance the short-term focus of the P4P program bytying rewards to performance achieved over multi-year periods. Under the Amended and Restated Long-TermIncentive Plan, the Committee may grant a variety of long-term incentive awards, including stock options,stock appreciation rights, restricted stock or restricted stock units, and performance shares or units, settled incash or stock. We use stock options, performance shares, and restricted shares as our long-term compensationvehicles.

To focus executives’ efforts on longer-term results, we have historically granted awards of stock optionsthat generally vest over three years, performance shares that vest at the end of a three-year period, andrestricted stock awards that vest after no less than two years. Recent stock option grants vest in equalinstallments in the second and third years from the anniversary date of grant, and performance shares aremeasured over a three-year performance period at which time they will vest only if the financial goals havebeen achieved. Unless otherwise noted, grants to our Named Executive Officers have vesting schedulesidentical to those for other executives. To vest in long-term equity incentive awards, employees must generallycontinue to work for us through the vesting dates or satisfy the definition of Retirement adopted in 2011.

Our current granting process involves developing long-term incentive grant values (by position level) forgroups of executives, including our Named Executive Officers. Within these general grant guidelines,individual awards may be adjusted up or down to reflect the performance of the executive and his or herpotential to contribute to the success of our initiatives to create shareholder value, as well as other individualconsiderations. The Committee also assesses aggregate share usage and dilution levels in comparison togeneral industry norms. Through this method, the Committee believes it is mindful of total cost, grants awardsthat are competitive within the market, promotes internal equity and reinforces our philosophy of pay forperformance.

The Committee reviews and approves individual grants for the Named Executive Officers as well as allstock option, performance share (P-Share) and restricted share (R-Share) grants made to other executivesunder the purview of the Committee. Annual grants for all officers are reviewed and approved at theCommittee’s scheduled meeting at approximately the same time each year and may be granted only with anexercise price at or above the closing market price of our common stock on the date of grant (Fair MarketValue). Interim or off-cycle grants are reviewed and approved by the Committee and granted at the closingmarket price of our common stock on the date of approval for executives under the purview of theCommittee. The Chief Executive Officer has been authorized by the Committee to utilize a designated numberof shares each year to grant equity awards to non-Section 16 executives to reward, motivate and/or retain suchemployees, as deemed necessary by the CEO. Such awards are periodically reviewed by the Committee.

In past years, we delivered stock option grants to approximate the 50th percentile of the relevantcomparator group and P-Shares, if earned, to approximate the 75th percentile of the relevant comparatorgroup. In 2011, as in 2010, the Committee decided that Total Direct Compensation, comprised of base salary,target annual cash incentives and target long-term equity incentive awards, should approximate the median ofour relevant comparator group.

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Change to Treatment of Retirement

Based on the independent consultant review of competitive compensation practices, effectiveSeptember 30, 2011 the Compensation Committee approved changes to the treatment upon retirement of stockoptions, restricted stock and performance share awards made under the LTI Plan. For this purpose,“Retirement” means voluntary termination of employment after achieving either (a) 62 years of age or (b) 60years of age with at least 10 years of employment with the Company. The awards outstanding under the LTIPPlan will be treated as follows upon an individual’s Retirement:

v the stock options granted which remain outstanding at the date of Retirement will continue to vest onthe dates included in the award agreements relating to the options and for each such option award therecipient may exercise the options until the earlier of (x) the expiration date for such options or (y) fiveyears after the date of Retirement;

v any unvested restricted stock granted will continue to vest after Retirement on the same vestingschedule as if the employee had remained employed; and

v a pro rata portion of any performance shares granted will vest (based on the number of days from thebeginning of the performance period until the date of Retirement divided by the total number of daysin the performance period) and, to the extent the performance criteria are met, such pro rata portionshall be paid at the same time as others receive payments under such performance share award.

Prior to this change, all vesting ceased on the date of retirement for outstanding equity grants, and vestedstock options continued to be exercisable for 90 days after termination date.

Equity Grants in 2011

The Committee established the annual target for all long-term equity incentive grants based oncompetitive market data. The approach was intended to deliver median Total Direct Compensation using acombination of stock options, P-Shares and R-Shares. In 2011, the Committee reinstated its practice of using a15-day average of our stock price to calculate the number of shares granted to each executive. We continuedto use a Black-Scholes valuation model as in previous years to determine option values.

In 2011, we delivered mix of stock options (50%), P-Shares (25%) and R-Shares (25%). This mix wasdesigned to address retention concerns and balance the mix of equity vehicles used, although the performanceelements (stock options and P-Shares) make up the majority of total long-term equity incentives. The P-Sharesawarded in 2011 vest based on our average Pre-Tax Operating Income (as defined below) over the course ofthe three-year performance period ending December 31, 2013 and have up-side opportunity of 150% of thetarget award.

Table 6 shows the annual equity awards granted to our Named Executive Officers in 2011 (excluding thespecial equity retention awards).

Table 6 — 2011 Annual Equity Grants2011 Grant

Named Executive Officer Stock OptionsRestricted

SharesPerformance

Shares

Edward Bonach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,500 31,600 31,600Grant Date Fair Value: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $541,943 $233,208 $233,208

Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,100 27,600 27,600Grant Date Fair Value: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $471,576 $203,688 $203,688

Eric Johnson. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,100 27,600 27,600Grant Date Fair Value: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $471,576 $203,688 $203,688

Steven Stecher. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,100 27,600 27,600Grant Date Fair Value: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $471,576 $203,688 $203,688

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Long-Term Incentive Program Performance for Awards Granted in 2009, 2010 and 2011

2009–2011 P-Share Performance

P-Share vesting for the 2009–2011 grant was based on the achievement of one-year Operating Return onEquity in year three (2011) of the performance period. We believed that increased Operating Return on Equitywas a good measure of fundamental operating improvement in our Company that would drive shareholdervalue. For the 2009–2011 grant, we intended to deliver compensation at the 50th percentile of the relevantcomparator group. At the end of the performance period (December 31, 2011), the performance goal indicatedabove was not achieved. Accordingly, no P-Shares vested from this grant.

2010–2012 and 2011–2013 P-Share Performance Metrics and Targets

P-Share vesting for the 2010–2012 and 2011–2013 grants is based on three year averages of Pre-TaxOperating Income, $270.0 million and $315.7 million at target, respectively. Both grants are tracking towardsan above target payout.

Table 7 shows the opportunities for Named Executive Officers related to P-Share vesting, depending onthe level of performance achieved in relation to the associated grant metrics.

Table 7 — P-Share Opportunities for Named Executive Officers in 2011

Named Executive Officer

Threshold(as % of

Target Shares)

Target(as % of

Target Shares)

Maximum(as % of

Target Shares)

Edward Bonach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 150%Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 150%Eric Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 150%Steven Stecher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25% 100% 150%

Special Retention Awards

In January 2011 a special equity retention grant of restricted shares was awarded to Mr. Bonach, ChiefFinancial Officer at the time, Mr. Perry, President — Bankers Life at the time, and Mr. Stecher, President —Washington National. The vesting of the restricted shares is subject to their continued employment withone-half of the restrictions lapsing in December 2012 and the remaining one-half lapsing in December 2013.These awards were made to recognize Mr. Bonach’s, Mr. Perry’s, and Mr. Stecher’s individual performance,critical skill set, and leadership, and to ensure continued employment through critical milestones.

Table 8 sets forth these special restricted share awards made to Named Executive Officers in 2011.

Table 8 — 2011 Special Retention Awards for Named Executive Officers

Named Executive OfficerRestricted

SharesGrant Date

Value

Edward Bonach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,000 $898,860Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 $601,350Steven Stecher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,000 $297,510

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Other Benefits

Our Named Executive Officers are eligible to participate in all of the broad-based Company-sponsoredbenefits programs on the same basis as other full-time employees. These include our health and welfarebenefits, such as our medical/dental plans, disability plans and life insurance. We do not offer any supplementalexecutive health and welfare programs. Executives may also participate in our 401(k) Plan. The Company alsohas a non-qualified deferred compensation plan. This plan is primarily intended as a “restoration” plan, givingparticipants the ability to defer their own compensation above the Internal Revenue Service limits imposed onthe 401(k) Plan. At present, we do not make regular contributions to the non-qualified deferred compensationplan in addition to the amounts contributed by our executives.

Compensation of the Chief Executive Officer

Effective October 1, 2011, Mr. Bonach was appointed Chief Executive Officer and retained theresponsibilities of the Chief Financial Officer while the Company underwent a search for a new ChiefFinancial Officer. Mr. Bonach continued to be the Chief Financial Officer until January 23, 2012.

As Chief Executive Officer, Mr. Bonach’s total compensation components were determined in accordancewith the compensation philosophy described above, including the policy of targeting our compensation withinour “competitive market”. In setting his salary, target incentive and equity compensation, the Committee reliedon market competitive pay data and the strong belief that the Chief Executive Officer significantly and directlyinfluences our overall performance.

On August 17, 2011, the Board approved the following changes to the employment agreement withMr. Bonach in connection with his promotion to Chief Executive Officer:

v An increase in his annual base salary from $550,000 to $800,000 effective October 1, 2011;

v An increase under the Company’s pay for performance plan of his target and maximum bonuses to125% and 250%, respectively, of his annual salary, effective October 1, 2011 (through September 30,2011, his target bonus was 100% of his annual salary and his maximum bonus was 200% of his annualsalary); and

v An extension of the expiration date of his employment agreement to October 1, 2014.

An equity grant was not awarded in connection to his appointment to Chief Executive Officer.

Based on the achievement of Operating EPS at $0.76 per share, Combined EBIT of $419.4 million,Combined VNB of $68.0 million and Combined Operating Expense of $595.1 million for the year endedDecember 31, 2011, Mr. Bonach’s P4P payment for 2011 was $1,043,276.

Compensation of the Former Chief Executive Officer

Mr. Prieur’s base salary, target incentive, and equity compensation awards for fiscal 2011 weredetermined in accordance with the compensation philosophy described above, including the policy of targetingour compensation within our “competitive market.”

In March 2011, based on the competitive placement of his base salary relative to his peers in the market,Mr. Prieur did not receive a base salary increase or change to his target annual incentive opportunity in 2011.Through the delivery of equity, the Committee strengthened the alignment of Mr. Prieur’s compensation withthe interests of our shareholders.

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Named Executive OfficerBase

Salary

TargetIncentive(P4P)

(% of Salary)(1)Target TotalAnnual Cash

Stock OptionValue(2)

P-ShareValue(2)

R-ShareValue(2)

Total LTIValue(2) TDC(3)

James Prieur, Former ChiefExecutive Officer . . . . . . . . $900,000 125% $2,025,000 $1,077,645 $465,678 $465,678 $2,009,001 $4,034,001% Change vs. 2010(4) . . . . 0% 0% –51% –35%% of TDC . . . . . . . . . . . . . . 22% 50% 50%

(1) Annual Incentive expressed as Target level. The percent of salary Mr. Prieur would receive at thresholdwas 31.25% and at maximum the percent of salary would be 250%.

Mr. Prieur’s P4P 2011 Metrics (and their respective weightings) were Operating EPS (50%), CombinedEBIT (20%), Combined Operating Expense (15%), and Combined VNB (15%).

(2) Represents stock option, performance share and restricted share grant date fair values made during theannual grant.

(3) TDC includes Target TAC and the value of equity provided at the time of the annual grant.

(4) The 2011 mix of equity vehicles remained the same from 2010 with stock options, P-Shares andrestricted shares, and the overall grant value continued to target the market median.

On July 6, 2011, the Company announced that Mr. Prieur had decided to retire as of September 30, 2011.On August 17, 2011, the Board approved the following items relating to his retirement:

v Mr. Prieur was entitled to receive a pro rata portion (through the date of his retirement) of his pay forperformance bonus based on the Company’s results for the year ending December 31, 2011 underpreviously established performance measures;

Based on the achievement of Operating EPS at $0.76 per share, Combined EBIT of $419.4 million,Combined VNB of $68.0 million and Combined Operating Expense of $595.1 million for the yearending December 31, 2011, Mr. Prieur’s prorated incentive payment for 2011 was $1,335,568.

v The stock options previously granted to Mr. Prieur and scheduled to vest in 2012 vested onSeptember 30, 2011, and Mr. Prieur had 90 days to exercise those options. The options that vestedupon his retirement were (i) 210,674 options with an exercise price of $6.45 per share, (ii) 62,500options with an exercise price of $1.13 per share, and (iii) 170,000 options with an exercise price of$3.05 per share. Options scheduled to vest in 2013 and subsequent years were cancelled upon hisretirement; and

v The shares of restricted stock previously awarded to Mr. Prieur and scheduled to vest in 2012 vestedon September 30, 2011 (a total of 74,559 shares). The shares of restricted stock scheduled to vest in2013 and subsequent years were cancelled.

In addition, all of the P-Shares grants were cancelled upon Mr. Prieur’s retirement.

Additional Information

Stock Ownership Guidelines

After a comprehensive review of peer companies, the Committee adopted Stock Ownership Guidelinesfor our Chief Executive Officer and the executives who report to him in May 2011. The Guidelines alignmanagement’s interests with those of our shareholders and provides a continuing incentive for management tofocus on long-term growth. The individuals covered by the guidelines have until the fifth anniversary of theiradoption (or the fifth anniversary of the date of the executive’s appointment to the covered position, whicheveris later) to meet those guidelines and until such time as the individual meets the guidelines he or she shallretain ownership of not less than one-half of the net shares of common stock received, after payment of

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applicable taxes, upon the vesting or exercise, as applicable, of any equity award under the company’s Long-Term Incentive Plan or any other similar plan adopted by the Company.

The guidelines are as follows: for the CEO, five times the base salary; for President/EVP, two times thebase salary; and for select SVPs, one times the base salary.

The Committee will review adherence to the guidelines each year.

Clawback Rights

Our Amended and Restated Long-Term Incentive Plan contains a clawback provision relating to ourlong-term equity awards: stock options, P-Shares and restricted shares. Under this clawback provision, if ourfinancial statements are required to be restated as a result of errors, omissions, or fraud, the Committee may,at its discretion, based on the facts and circumstances surrounding the restatement, direct the recovery of allor a portion of an equity award from one or more executives with respect to any fiscal year in which ourfinancial results are negatively affected by such restatement. To do this, we may pursue various ways torecover awards from one or more executives: (1) seek repayment from the executive; (2) reduce the amountthat would otherwise be payable to the executive under another benefit plan; (3) withhold future equity grants,bonus awards, or salary increases; or (4) take any combination of these actions.

Our Pay for Performance (P4P) Plan contains recapture rights of any incentive amount paid or vested in theevent that the Committee determines that the achievement of performance goals was based on incorrect data.

Impact of Tax and Accounting on Compensation Decisions

As a general matter, the Committee considers the various tax and accounting implications of ourcompensation vehicles.

When determining amounts of long-term equity incentive grants to executives and employees, theCommittee considers the accounting cost associated with the grants. Under FASB ASC Topic 718, grants ofstock options, restricted stock, restricted stock units and other share-based payments result in an accountingcharge that is reflected in our financial statements.

Section 162(m) of the Internal Revenue Code generally prohibits any publicly held corporation fromtaking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year tothe chief executive officer and the next four highest compensated officers. Exceptions are made for qualifiedperformance-based compensation, among other things. It is the Committee’s policy to maximize theeffectiveness of our executive compensation plans in this regard. However, the Committee believes thatcompensation and benefits decisions should be primarily driven by the needs of the business, rather than bytax policy. Therefore, the Committee may make pay decisions (such as the determination of the ChiefExecutive Officer’s base salary) that result in compensation expense that is not fully deductible under Section162(m). Despite our large net operating loss carry-forward (related to our emergence from bankruptcy in2003), the Committee continues to administer our incentive plans so that payments qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code.

Termination and Change in Control Arrangements

Under the terms of award agreements under our equity-based compensation plans and under ouremployment agreements, the Named Executive Officers are entitled to payments and benefits upon theoccurrence of specified events including termination of employment for various reasons. The specific terms ofthese arrangements, as well as an estimate of the compensation that would have been payable had they beentriggered as of fiscal year-end, are described in the section entitled “Potential Payments Upon Termination orChange in Control” on page 43. The terms of these arrangements were set through the course of employment

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agreement negotiations with each of the Named Executive Officers, with an emphasis on internal consistency.In addition, as part of these negotiations, the Committee also analyzed the terms of the same or similararrangements for comparable executives employed by companies similar to our own.

The termination of employment provisions of the employment agreements were entered into in order toaddress competitive concerns when the Named Executive Officers were recruited. Providing those individualswith a fixed amount of compensation offset the potential risk of leaving their prior employer or foregoingother opportunities in order to work for us. At the time of entering into these arrangements, the Committeeconsidered our aggregate potential obligations in the context of the desirability of hiring the individual and theexpected compensation upon joining us.

Prohibition against Trading in Derivatives

It violates our policy for any senior personnel to purchase, sell or engage in any other transaction involvingany derivative securities or hedging related to any of our equity securities. This prohibition does not, however,apply to any exercise of our stock options pursuant to our Amended and Restated Long-Term Incentive Plan orany other benefit plans that we may adopt from time to time, any sale of our stock in connection with anycashless exercise (if otherwise permitted), or payment of withholding tax upon the exercise, of any such stockoption.

Report of the Human Resources and Compensation Committee

The Human Resources and Compensation Committee has reviewed the Compensation Discussion andAnalysis and has discussed it with management. Based on the Committee’s review and discussions withmanagement, the Committee recommended to our Board that the Compensation Discussion and Analysis beincluded in this proxy statement. This report is provided by the following independent directors, who comprisethe Committee:

John G. Turner, ChairFrederick J. SievertMichael T. Tokarz

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Summary Compensation Table for 2011

The following Summary Compensation Table sets forth compensation paid to (i) the individuals whoserved as our chief executive officer during 2011 (Mr. Prieur from January through September andMr. Bonach beginning October 1), (ii) our chief financial officer during 2011 (Mr. Bonach) and (iii) the otherthree most highly compensated individuals who served as executive officers of CNO as of December 31, 2011(collectively, the “Named Executive Officers”) for services rendered during 2011, 2010 and 2009.

SUMMARY COMPENSATION TABLE FOR 2011

Name and Principal Position Year Salary Bonus(1)Stock

Awards(2)Option

Awards(3)

Non-EquityIncentive Plan

Compensation(4)All Other

Compensation(5) Total

James Prieur (6) . . . . . . . . . . . . . . . . 2011 $754,615 — $1,393,622 $1,350,626 $1,335,568 $ 9,429 $4,843,860Retired Chief Executive Officer 2010 900,000 — 2,068,528 2,070,841 1,665,947 20,837 6,726,153

2009 900,000 — 497,600 843,314 1,075,989 9,156 3,326,059

Edward Bonach (7) . . . . . . . . . . . . . 2011 601,099 — 1,365,276 541,943 1,043,276 9,375 3,560,969Chief Executive Officer; 2010 503,751 $500,000 556,976 538,171 746,710 9,156 2,854,764Chief Financial Officer 2009 472,500 — 210,720 363,213 451,915 9,156 1,507,504

Scott Perry (8) . . . . . . . . . . . . . . . . . 2011 492,929 — 1,008,726 471,576 798,160 21,208 2,792,599Chief Operating Officer; 2010 441,324 — 535,080 515,563 698,624 31,152 2,221,743President, Bankers Life 2009 441,324 — 137,920 363,213 593,240 7,980 1,543,677

Eric Johnson . . . . . . . . . . . . . . . . . . . 2011 500,000 — 407,376 471,576 857,562 966 2,237,480President, 40|86 Advisors Inc. 2010 500,000 — 362,670 334,036 968,117 966 2,175,789

2009 500,000 — 115,520 308,178 468,865 630 1,393,193

Steven Stecher . . . . . . . . . . . . . . . . . 2011 422,833 — 704,886 471,576 511,454 13,553 2,124,302President, Washington National 2010 412,000 — 468,195 447,247 391,626 19,249 1,738,317

2009 412,000 — 137,920 363,213 263,760 12,049 1,188,942

(1) The amount shown in this column is a bonus payment specified by the terms of the individual’semployment agreement. Amounts paid under the Company’s Pay for Performance Incentive Plan areincluded in the column “Non-Equity Incentive Plan Compensation.”

(2) This column represents the aggregate grant date fair value of restricted stock and performance shareawards, in accordance with ASC 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. For restricted stock, fair value is calculated using the closing price of CNOcommon stock on the date of grant. For additional information, see Note 9 to the CNO financialstatements in the Form 10-K for the year ended December 31, 2011, as filed with the SEC. See theGrants of Plan-Based Awards table for information on awards made in 2011. The amounts in this columndo not necessarily correspond to the actual value that will be recognized by the Named ExecutiveOfficers. The amounts in this column for 2011 include the grant date value of performance share awardsbased on the targeted amounts for each of the Named Executive Officers. Under the terms of thoseperformance share awards, the officers are entitled to receive 150% of the targeted number of shares ifthe Company equals or exceeds the maximum levels set forth in those awards. If the maximum levels areachieved for the performance share awards made in 2011, the aggregate grant date value of the awardsshown in this column would be as follows: Mr. Prieur, $0; Mr. Bonach, $349,812; Mr. Perry, $305,532;Mr. Johnson, $305,532; and Mr. Stecher, $305,532.

(3) This column represents the aggregate grant date fair value of stock options granted to each of the NamedExecutive Officers, in accordance with ASC 718, excluding the impact of estimated forfeitures related toservice-based vesting conditions. For additional information on the valuation assumptions with respect tothe 2011 grants, refer to Note 9 of the CNO financial statements in the Form 10-K for the year endedDecember 31, 2011, as filed with the SEC. For information on the valuation assumptions with respect togrants made prior to 2011, refer to the note on stockholders’ equity and stock-related information to theCNO financial statements in the Form 10-K for the respective year-end. See the Grants of Plan-Based

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Awards table for information on options granted in 2011. The amounts in this column do not necessarilycorrespond to the actual value that will be recognized by the Named Executive Officers.

(4) This column represents the dollar amount of payments made after year end to the Named ExecutiveOfficers based on performance for the specified year with respect to the targets established under theCompany’s Pay for Performance (P4P) Incentive Plan.

(5) For 2011, the amounts reported in this column represent the amounts paid for: (i) group life insurancepremiums, (ii) Company contributions to the 401(k) Plan, (iii) spousal travel benefits and (iv) amountspaid as reimbursement for taxes paid on taxable income associated with spousal travel.

The table below shows such amounts for 2011 for each named executive officer:

Name

GroupLife Insurance

Premiums401(k) Plan

ContributionsSpousalTravel

TaxReimbursement

James Prieur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,079 $7,350 $ — $ —Edward Bonach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,806 7,350 154 65Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630 7,350 8,799 4,429Eric Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966 — — —Steven Stecher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966 7,350 3,622 1,615

(6) Mr. Prieur retired on September 30, 2011.

(7) Mr. Bonach became Chief Executive Officer on October 1, 2011 and served as Chief Financial Officerthroughout 2011.

(8) Mr. Perry became Chief Operating Officer on July 6, 2011 and continues to serve as President of BankersLife and Casualty Company.

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Grants of Plan-Based Awards in 2011

The following table shows certain information concerning grants of plan-based awards in 2011 to theNamed Executive Officers.

GRANTS OF PLAN-BASED AWARDS IN 2011

Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1)

Estimated Future Payouts(in Shares of Common Stock)

Under Equity IncentivePlan Awards(2)

NameGrantDate Threshold Target Maximum Threshold Target Maximum

All OtherStock

Awards:Numberof Sharesof Stock

or Units(3)

All OtherOption

Awards:Number ofSecurities

UnderlyingOptions(4)

Exerciseor BasePrice ofOption

Awards(5)

Grant DateFair Value

of Stockand OptionAwards(6)

James Prieur (7) . . . $281,250 $1,125,000 $2,250,0003-8-11 63,100 $ 465,6783-8-11 189,900 $7.38 1,077,6453-8-11 15,775 63,100 94,650 465,678

8-17-11 74,559 462,2668-17-11 62,500 1.13 38,5008-17-11 170,000 3.05 104,7208-17-11 210,674 6.45 129,761

Edward Bonach . . . . 164,322 657,288 1,314,5761-31-11 142,000 898,860

3-8-11 31,600 233,2083-8-11 95,500 7.38 541,9433-8-11 7,900 31,600 47,400 233,208

Scott Perry . . . . . . . 123,589 494,354 988,7081-31-11 95,000 601,350

3-8-11 27,600 203,6883-8-11 83,100 7.38 471,5763-8-11 6,900 27,600 41,400 203,688

Eric Johnson . . . . . . 125,000 500,000 1,000,0003-8-11 27,600 203,6883-8-11 83,100 7.38 471,5763-8-11 6,900 27,600 41,400 203,688

Steven Stecher . . . . 105,751 423,005 846,0101-31-11 47,000 297,510

3-8-11 27,600 203,6883-8-11 83,100 7.38 471,5763-8-11 6,900 27,600 41,400 225,400

(1) These amounts represent the threshold, target and maximum amounts that would have been payable for2011 if the corresponding performance-based metrics under the CNO Pay for Performance Incentive Planhad been achieved. The amounts paid for 2011 performance under the Pay for Performance IncentivePlan are listed in the Summary Compensation Table on page 35 of this proxy statement under the columnheading “Non-Equity Incentive Plan Compensation.”

(2) These amounts represent the threshold, target and maximum number of shares that the Named ExecutiveOfficers can receive under the terms of the performance share awards made in 2011. See footnote (3) tothe “Outstanding Equity Awards at 2011 Fiscal Year-End” table below for additional informationregarding the 2011 performance share awards.

(3) The amounts in this column represent the number of shares of restricted stock that were awarded to theNamed Executive Officers during 2011 under the Amended and Restated Long-Term Incentive Plan.

(4) The amounts in this column represent the number of stock options granted to the Named ExecutiveOfficers during 2011 under the Amended and Restated Long-Term Incentive Plan.

(5) The exercise price equals the closing sales price of CNO common stock on the New York StockExchange on the date of grant. The exercise prices listed for the August 17, 2011 awards to Mr. Prieurare the exercise prices of the original grants. See footnote (7) below for additional information.

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(6) The values included in this column represent the grant date fair value of restricted stock, performanceshare and option awards computed in accordance with ASC 718. For restricted stock, the value is basedon the closing sales price on the New York Stock Exchange on the date of grant. A description of theassumptions used in calculating these values may be found in Note 9 to the CNO financial statements inthe Form 10-K for the year ended December 31, 2011, as filed with the SEC.

(7) Mr. Prieur retired on September 30, 2011. In connection with his retirement, the Board approved thefollowing items on August 17, 2011: (i) a pro rata payment of the amount payable under the CNO Payfor Performance Incentive Plan based on actual results for the year ended December 31, 2011; (ii)amendments to the terms of his previously granted stock options to provide that all options previouslyscheduled to vest in 2012 would vest upon his retirement, with a 90 day exercise period; and (iii)amendments to the terms of his previously granted restricted stock awards to provide that certain sharesof restricted stock scheduled to vest in 2012 would vest upon his retirement. The options that vestedupon his retirement included 210,674 options with an exercise price of $6.45 per share, 62,500 optionswith an exercise price of $1.13 per share and 170,000 options with an exercise price of $3.05 per share.The amounts in the table for the August 17, 2011 grant date reflect the grant date fair value of theamendments to his stock options and restricted stock made on that date, computed in accordance withASC 718 (the closing sale price of the common stock on that date was $6.20 per share).

Narrative Supplement to the Summary Compensation Table and the Grants of Plan-Based Awards in2011 Table

Employment Agreements

Chief Executive Officer. We entered into an amended and restated employment agreement withMr. Bonach, effective October 1, 2011, pursuant to which he serves as our chief executive officer, for a termending on October 1, 2014. The amended agreement increased his annual base salary to $800,000 effectiveOctober 1, 2011 (with increases from time to time based on his performance) and provides for an annualperformance-based bonus. For the period ending September 30, 2011 during which Mr. Bonach served aschief financial officer, his target bonus was 100% of his salary during that period, with a maximum of 200%of his target bonus. Effective October 1, 2011, the target bonus for Mr. Bonach is 125% of base salary, with amaximum of 200% of his target bonus. As described more fully in “Potential Payments upon Termination orChange in Control,” if Mr. Bonach’s employment is terminated by us without “Cause” or if he resigns “WithReason” (as defined in his employment agreement), or his employment is terminated by reason of his death or“Disability” (as defined in his employment agreement), Mr. Bonach would be entitled to receive specifiedadditional benefits. Mr. Bonach is subject to a non-solicitation and non-competition clause throughout theterm of the agreement and for one year thereafter.

Former Chief Executive Officer. We did not have an employment agreement with Mr. Prieur at the timeof his retirement.

Chief Operating Officer. We entered into an employment agreement with Mr. Perry, effective July 6,2011, pursuant to which he serves as Chief Operating Officer and as President of Bankers Life and CasualtyCompany, for a term ending on July 6, 2014. His employment agreement provides for an annual base salaryof $525,000 (with increases from time to time based on his performance) and an annual performance-basedbonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fullyin “Potential Payments upon Termination or Change in Control,” if Mr. Perry’s employment is terminated byus without “Cause” or if he resigns “With Reason” (as defined in his employment agreement), or hisemployment is terminated by reason of his death or “Disability” (as defined in his employment agreement),Mr. Perry would be entitled to receive specified additional benefits. Mr. Perry is subject to a non-solicitationand non-competition clause throughout the term of his agreement and for one year thereafter.

President, 40|86 Advisors, Inc. 40|86 Advisors, Inc., our wholly-owned investment managementsubsidiary that manages the investment portfolios of our insurance subsidiaries, entered into an amended and

38

restated employment agreement with Mr. Johnson, effective December 21, 2009, pursuant to which he servesas President of 40|86 Advisors. His employment agreement was amended on February 7, 2011 to extend theterm of the agreement to September 30, 2012. The agreement provides for an annual base salary of $500,000(with increases from time to time based on his performance) and an annual performance-based bonus with atarget of 100% of base salary and a maximum of 200% of base salary. As described more fully in “PotentialPayments upon Termination or Change in Control,” if Mr. Johnson’s employment is terminated by us without“Cause” or if he resigns “With Reason” (as defined in his employment agreement), or his employment isterminated by reason of his death or “Disability” (as defined in his employment agreement), Mr. Johnsonwould be entitled to receive specified additional benefits. Mr. Johnson is subject to a non-solicitation clausethroughout the term of the agreement and for one year thereafter.

President, Washington National. Effective May 26, 2010, Mr. Stecher entered into an amendedemployment agreement pursuant to which he serves as President of Washington National Insurance Company,for a term that expires on July 31, 2013. The amended employment agreement provided for an annual salaryof $412,000 (with increases from time to time based on his performance) and an annual performance-basedbonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fullyin “Potential Payments upon Termination or Change in Control,” if Mr. Stecher’s employment is terminated byus without “Cause” or if he resigns “With Reason” (as defined in his employment agreement), or hisemployment is terminated by reason of his death or “Disability” (as defined in his employment agreement),Mr. Stecher would be entitled to receive specified additional benefits. Mr. Stecher is subject to a non-solicitation and non-competition clause throughout the term of the agreement and for one year thereafter.

Terms of Equity-Based Awards

Vesting Schedule

Unless otherwise provided in the footnote disclosure to the table of Outstanding Equity Awards at 2011Fiscal Year-End on pages 40 and 41 of this Proxy Statement, one-half of each option award vests on thesecond anniversary of the date of grant and the other one-half vests on the third anniversary of the date ofgrant. Options granted in 2006 and prior years expire ten years from the date of grant; options granted in2007-2009 expire five years from the date of grant; and options granted in 2010 and subsequent years expireseven years from the date of grant.

Annual awards of restricted stock vest in three equal annual installments beginning one year after thegrant. The vesting schedule for special awards of restricted stock is generally over a period of two or threeyears. For the special retention awards of restricted stock made to Mr. Bonach, Mr. Perry and Mr. Stecher inJanuary 2011, one-half of the award vests in December 2012 and the other one-half vests in December 2013.Performance share awards are measured over a three-year performance period at which time they will vestonly if the financial goals have been achieved. Unless otherwise noted, grants to the Named ExecutiveOfficers have vesting schedules identical to other officers.

Forfeiture and Post-Employment Treatment

Holders of stock options generally have 90 days after termination of employment to exercise options tothe extent they were vested on the date of termination. Unvested restricted stock and performance shares aregenerally forfeited upon termination of employment except upon retirement. See “Change to Treatment ofRetirement” on page 29 for a description of the treatment of equity awards upon retirement.

Option Exercise Price

Options granted under the Company’s Amended and Restated Long-Term Incentive Plan have an exerciseprice equal to the closing price on the date of grant.

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Dividends

Holders of restricted stock are entitled to receive any cash dividends at the same times and in the sameamounts per share as holders of the Company’s common stock. Holders of performance share awards areentitled to dividend equivalents on any performance shares that vest. Such dividend equivalents are payable incash at the time of vesting of the performance shares to the extent that cash dividends are paid on thecommon stock underlying the performance shares after the award date and prior to the issuance of sharesupon vesting. The Company does not currently pay dividends on its common stock.

Outstanding Equity Awards at 2011 Fiscal Year-End

The following table sets forth certain information concerning outstanding equity awards held by theNamed Executive Officers as of December 31, 2011.

OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR-ENDSTOCK AWARDS

OPTION AWARDS

NameAwardDate

Number ofSecurities

UnderlyingUnexercised

OptionsExercisable

Number ofSecurities

UnderlyingUnexercised

OptionsUnexercisable

OptionExercise

Price

OptionExpiration

Date(1)

Number ofShares orUnits of

Stock ThatHave Not

Vested

MarketValue of

Shares orUnits of

StockThat Have

NotVested(2)

EquityIncentive

Plan Awards:Number ofUnearned

Shares,Units or

Other RightsThat Have

NotVested(3)

EquityIncentive

Plan Awards:Market or

PayoutValue of

UnearnedShares,Units or

Other RightsThat Have

Not Vested(4)

James Prieur (5) . . — — — $ — — — —

Edward Bonach . . 5-11-07 80,000 — 18.35 5-11-12 — —4-1-08 100,000 — 10.55 4-1-13 — —4-2-09(6) — 21,750 1.13 4-2-14 28,333 178,781

5-12-09(7) 75,000 75,000 3.05 5-12-14 — —3-2-10(8) — — — — 2,000 12,620

3-18-10(9) — 109,500 6.45 3-18-17 27,800 175,418 10,425 65,7821-31-11(10) — — — — 142,000 896,020

3-8-11(11) — 95,500 7.38 3-8-18 31,600 199,396 7,900 49,849

Scott Perry . . . . . . 6-1-04 18,000 — 21.00 6-1-14 — —6-27-05 25,000 — 21.67 6-27-15 — —6-30-06 45,000 — 23.10 6-30-16 — —3-26-07 80,000 — 17.75 3-26-12 — —

4-1-08 80,000 — 10.55 4-1-13 — —4-2-09(6) 10,750 21,750 1.13 4-2-14 6,666 42,062

5-12-09(7) 75,000 75,000 3.05 5-12-14 — —3-2-10(8) — — — — 2,000 12,620

3-18-10(9) — 104,900 6.45 3-18-17 26,666 168,262 10,000 63,1001-31-11(10) — — — — 95,000 599,450

3-8-11(11) — 83,100 7.38 3-8-18 27,600 174,156 6,900 43,539

Eric Johnson . . . . 6-1-04 150,000 — 21.00 6-1-14 — —3-26-07 88,000 — 17.75 3-26-12 — —

4-1-08 50,000 — 10.55 4-1-13 — —4-2-09(6) 21,750 21,750 1.13 4-2-14 — —

5-12-09(7) 62,500 62,500 3.05 5-12-14 — —3-2-10(8) — — — — 1,500 9,465

3-18-10(9) — 70,000 6.45 3-18-17 18,000 113,580 6,750 42,5933-8-11(11) — 83,100 7.38 3-8-18 27,600 174,156 6,900 43,539

Steven Stecher . . . 9-17-04 10,000 — 17.87 9-17-14 — —6-27-05 30,000 — 21.67 6-27-15 — —6-30-06 36,000 — 23.10 6-30-16 — —3-26-07 54,000 — 17.75 3-26-12 — —

4-1-08 60,000 — 10.55 4-1-13 — —8-18-08 20,000 — 8.91 8-18-13 — —

4-2-09(6) — 21,750 1.13 4-2-14 6,666 42,0625-12-09(7) — 75,000 3.05 5-12-14 — —

3-2-10(8) — — — — 1,750 11,0433-18-10(9) — 91,000 6.45 3-18-17 23,333 147,231 8,750 55,2131-31-11(10) — — — — 47,000 296,570

3-8-11(11) — 83,100 7.38 3-8-18 27,600 174,156 6,900 43,539

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(1) All options in this table that were granted in 2006 or prior years have a 10 year expiration date, whileoptions granted in 2007–2009 have a five year expiration date and options granted in 2010–2011 have aseven year expiration date. All options are subject to acceleration for certain events.

(2) Based on the closing sales price of CNO common stock ($6.31) on December 30, 2011, the last tradingday of the year.

(3) In accordance with SEC rules, the amounts included in this column represent the number of shares ofCNO common stock to which the Named Executive Officer will be entitled if the Company achieves thethreshold performance level with respect to the performance share awards made in 2010 and 2011. Theperformance share awards made in 2010 and 2011 are tied to the CNO’s average pre-tax operatingearnings for the three-year periods ending December 31, 2012 and December 31, 2013, respectively. Forpurposes of these awards, “pre-tax operating earnings” are defined as pre-tax income before (i) gain orloss on extinguishment or modification of debt; (ii) net realized investment gains or losses, net ofamortization; (iii) discontinued operations; (iv) the cumulative effect of changes in accounting principles;(v) dividends on preferred stock; and (vi) unusual income or expense items that are unlikely to recur asdetermined by the Human Resources and Compensation Committee. For the 2010 performance shareaward, no portion will be earned if the Company’s average pre-tax operating income for the three-yearperiod is less than $250.0 million, and payouts begin with a 25% payout at the threshold level of $250.0million. For the 2011 performance share award, no portion will be earned if the Company’s averagepre-tax operating income for the three year-period is less than $276.6 million, and payouts begin with a25% payout at the threshold level of $276.6 million. Accordingly, the number of shares in this columnincludes 25% of the number of performance shares granted to the named executive officer in 2010 and2011.

(4) The dollar amounts in this column equal the number of threshold level performance shares, calculated asdescribed in footnote (3) above, multiplied by the closing sales price of CNO common stock onDecember 30, 2011 ($6.31).

(5) Mr. Prieur retired on September 30, 2011 and held no awards as of December 31, 2011.

(6) One-half of these options vested on April 2, 2011 and the balance vests on April 2, 2012. The remainingshares from this restricted stock award vest on March 31, 2012.

(7) One-half of these options vested on May 12, 2011 and the balance vests on May 12, 2012.

(8) The balance of this restricted stock award vests on March 2, 2012.

(9) One-half of these options vested on March 18, 2012 and the balance vests on March 18, 2013. Theremaining shares from this restricted stock award vest in equal annual installments commencingMarch 18, 2012.

(10) One-half of this restricted stock award vests on December 28, 2012 and the balance vests on December 30,2013.

(11) One-half of these options vest on March 8, 2013 and the balance vests on March 8, 2014. The restrictedstock award vests in three equal annual installments commencing March 8, 2012.

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Option Exercises and Stock Vested in 2011

The following table provides information, for the Named Executive Officers, concerning (i) stock optionexercises during 2011 and the value realized upon exercise (before payment of any applicable withholdingtax) and (ii) the number of shares acquired upon the vesting of restricted stock awards and the value realizedupon vesting (before payment of any applicable withholding tax).

OPTION EXERCISES AND STOCK VESTED IN 2011

OPTION AWARDS STOCK AWARDS

Name

Number ofShares

AcquiredOn Exercise

ValueRealized

Upon Exercise

Number ofShares

Acquired onVesting

ValueRealized on

Vesting

James Prieur . . . . . . . . . . . . . . . . . . . . . . 465,000 $1,492,064 194,768 $1,274,936Edward Bonach . . . . . . . . . . . . . . . . . . . 21,750 95,890 44,233 323,603Scott Perry . . . . . . . . . . . . . . . . . . . . . . . . 11,000 49,169 22,001 157,174Eric Johnson . . . . . . . . . . . . . . . . . . . . . . — — 10,500 73,425Steven Stecher . . . . . . . . . . . . . . . . . . . . 96,750 413,302 25,084 173,976

Nonqualified Deferred Compensation in 2011

The following table shows certain information concerning nonqualified deferred compensation activity in2011 for our Named Executive Officers.

NONQUALIFIED DEFERRED COMPENSATION IN 2011

Name

ExecutiveContributions

in 2011

CNOContributions

in 2011

AggregateEarnings (Loss)

in 2011(1)

AggregateWithdrawals/Distributions

AggregateBalance at12/31/11(2)

James Prieur . . . . . . . . . . . . . . . . — — $ 33,190 $ — $2,467,613Edward Bonach . . . . . . . . . . . . . — — (18,925) — 409,059Scott Perry . . . . . . . . . . . . . . . . . . — — (508) 21,143 34,661Eric Johnson . . . . . . . . . . . . . . . . — — — — —Steven Stecher . . . . . . . . . . . . . . — — — — —

(1) Amounts in this column are not included in the Summary Compensation Table on page 35 of this ProxyStatement.

(2) Amounts included in this column reflect the following amounts contributed under the deferredcompensation plan by the Named Executive Officers, which amounts were in each case included in thesummary compensation table for the year(s) to which the compensation relates: Mr. Prieur, $1,822,500;Mr. Bonach, $428,739; and Mr. Perry, $24,573. The amount for Mr. Perry in this column includes a$3,873 balance in a separate deferred compensation plan for certain field managers of Bankers Life andCasualty Company, to which no further contributions are being made.

The 2011 Nonqualified Deferred Compensation table presents amounts deferred under our DeferredCompensation Plan. Participants may defer up to 100% of their base salary and annual incentive planpayments under the Deferred Compensation Plan. Deferred Amounts are credited with earnings or lossesbased on the return of mutual funds selected by the executive, which the executive may change at any time.We do not make matching contributions to participants’ accounts under the Deferred Compensation Plan.Distributions are made in either a lump sum or an annuity as chosen by the executive at the time of deferral.

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Potential Payments Upon Termination or Change in Control

Each of the Named Executive Officers listed below (other than Mr. Prieur) would be entitled to certainpayments upon termination of employment arising under (i) benefit plans covering all employees such asgroup life insurance coverage, (ii) agreements covering awards made under the Company’s Long-TermIncentive Plan and (iii) the terms of an employment agreement between the Named Executive Officer and theCompany or one of its subsidiaries. See “Termination and Change in Control Arrangements” on page 33 ofthis proxy statement for additional information regarding these arrangements. The following table estimatesthe amounts that would have been payable to the Named Executive Officers upon termination of employmentunder each of the identified circumstances as of December 31, 2011:

Name

Voluntary orFor Cause

Termination Disability Death

WithoutCause or

With GoodReason

Involuntary orGood ReasonTermination

upon or within2 years after

Change In Control

James Prieur(1) . . . . . . . . . . . . . — $ — $ — $ — $ —Edward Bonach(2) . . . . . . . . . . — 1,000,000 1,400,000 2,858,599 6,979,489Scott Perry(3) . . . . . . . . . . . . . . . — 525,000 925,000 1,848,160 3,990,674Eric Johnson(4) . . . . . . . . . . . . . — 500,000 900,000 1,857,562 3,209,074Steven Stecher(5) . . . . . . . . . . . — 425,000 825,000 1,361,454 2,807,281

(1) Mr. Prieur retired on September 30, 2011.

(2) For Mr. Bonach, his employment agreement provides for payments upon termination of employment asfollows: (i) due to disability, a pro rata portion of his target annual bonus ($1,000,000 as of December 31,2011); (ii) upon death, an amount equal to his target annual bonus (in addition, he would be entitled toreceive $400,000 under the Company’s group life insurance plan); (iii) without “Just Cause” or “WithReason” (as defined in his agreement), an amount equal to the pro rata portion of his actual bonus($1,043,276 for 2011) plus an amount equal to the sum of his target bonus and annual salary plus continuedparticipation for up to 12 months for Mr. Bonach and his family in all medical, health and life insuranceplans at the same benefit level at which he and his family were participating on the date of his termination(the amount in the table includes $15,323 for 12 months of such benefits); and (iv) upon an involuntarytermination or a termination by Mr. Bonach With Reason upon or within two years after a change incontrol, an amount equal to his pro rata target bonus for the year of termination plus two times the sum ofhis salary and target bonus plus continued participation for up to 24 months for Mr. Bonach and his familyin all medical, health and life insurance plans at the same benefit level at which he and his family wereparticipating on the date of his termination (the amount in the table includes $30,646 for 24 months of suchbenefits). In the event of a termination upon a change in control, in addition to the amounts payable underhis employment agreement, the vesting of his awards under the Company’s Long-term Incentive Plan wouldbe accelerated and the amount shown for Mr. Bonach includes the value as of December 31, 2011 of theaccelerated vesting of options ($601,665), restricted stock ($1,462,235) and performance shares ($241,667).

(3) For Mr. Perry, his employment agreement provides for payments upon termination of employment asfollows: (i) due to disability, a pro rata portion of his target annual bonus ($525,000 as of December 31,2011); (ii) upon death, an amount equal to his annual salary (in addition, he would be entitled to receive$400,000 under the Company’s group life insurance plan); (iii) without “Just Cause” or “With Reason”(as defined in his agreement), an amount equal to the pro rata portion of his actual bonus ($798,160 for2011) plus an amount equal to the sum of his target bonus and his annual salary; and (iv) upon aninvoluntary termination or a termination by Mr. Perry With Reason upon or within two years after achange in control, an amount equal to his pro rata actual bonus for the year of termination plus his targetbonus and one and one-half times his annual salary. In the event of a termination upon a change incontrol, in addition to the amounts payable under his employment agreement, the vesting of his awards

43

under the Company’s Long-term Incentive Plan would be accelerated and the amount shown forMr. Perry includes the value as of December 31, 2011 of the accelerated vesting of options ($657,350),restricted stock ($996,551) and performance shares ($226,113).

(4) For Mr. Johnson, his employment agreement provides for payments upon termination of employment asfollows: (i) due to disability, a pro rata portion of his target annual bonus ($500,000 as of December 31,2011); (ii) upon death, an amount equal to his target annual bonus (in addition, he would be entitled toreceive $400,000 under the Company’s group life insurance plan); (iii) without “Just Cause” or “WithReason” (as defined in his agreement), an amount equal to the pro rata portion of his actual bonus($857,562 for 2011) plus an amount equal to the sum of his target bonus and his annual salary; and (iv)upon an involuntary termination or a termination by Mr. Johnson With Reason upon or within two yearsafter a change in control, an amount equal to his pro rata actual bonus for the year of termination plushis target bonus and one and one-half times his annual salary. In the event of a termination upon achange in control, in addition to the amounts payable under his employment agreement, the vesting of hisawards under the Company’s Long-term Incentive Plan would be accelerated and the amount shown forMr. Johnson includes the value as of December 31, 2011 of the accelerated vesting of options ($632,830),restricted stock ($297,201) and performance shares ($171,481).

(5) For Mr. Stecher, his employment agreement provides for payments upon termination of employment asfollows: (i) due to disability, a pro rata portion of his target annual bonus ($425,000 as of December 31,2011); (ii) upon death, an amount equal to his annual salary (in addition, he would be entitled to receive$400,000 under the Company’s group life insurance plan); (iii) without “Just Cause” or “With Reason”(as defined in his agreement), an amount equal to the pro rata portion of his actual bonus ($511,454 for2011) plus an amount equal to the sum of his target bonus and his annual salary; and (iv) upon aninvoluntary termination or a termination by Mr. Stecher With Reason upon or within two years after achange in control, an amount equal to his pro rata actual bonus for the year of termination plus his targetbonus and one and one-half times his annual salary. In the event of a termination upon a change incontrol, in addition to the amounts payable under his employment agreement, the vesting of his awardsunder the Company’s Long-term Incentive Plan would be accelerated and the amount shown forMr. Stecher includes the value as of December 31, 2011 of the accelerated vesting of options ($357,165),restricted stock ($671,062) and performance shares ($205,100).

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PROPOSAL 2

APPROVAL OF AMENDED AND RESTATEDSECTION 382 SHAREHOLDERS RIGHTS PLAN

Introduction

On December 6, 2011, the Board adopted an Amended and Restated Section 382 Rights Agreement (the“Amended Rights Plan”). The Board had previously declared a dividend of one preferred share purchase right(a “Right”) for each outstanding share of common stock, par value $0.01 per share, of the Company (the“Common Stock”) that was paid to the shareholders of record as of the close of business on January 30, 2009pursuant to the Company’s original Section 382 Rights Agreement, dated as of January 20, 2009 (the“Original Rights Plan”).

The Original Rights Plan, which the Company’s shareholders approved at the Company’s 2009 AnnualMeeting, had been scheduled to expire on January 20, 2012. In order to extend the term of the Original RightsPlan, and to amend certain other provisions therein, the Original Rights Plan was amended and restated in itsentirety. The amendments, among other things:

v extended the final expiration date of the Amended Rights Plan to December 6, 2014;

v updated the purchase price of the Rights;

v provided for a new series of preferred stock relating to the Rights that is substantially identical to theprior series of preferred stock;

v provided for a 4.99% ownership threshold relating to any Company 382 Securities (as defined below);and

v amended certain other provisions to reflect best practices for tax benefit preservation plans, includingupdates to certain definitions.

The Amended Rights Plan approval proposal is an opportunity for shareholders to approve the decisionby the Board to adopt the Amended Rights Plan. If the shareholders do not approve the Amended Rights Planat the Annual Meeting, the Amended Rights Plan will expire upon the adjournment of the Annual Meeting.

Purpose of the Amended Rights Plan

The Amended Rights Plan is designed to prevent certain transfers of our Common Stock or othersecurities interests (collectively, “Company 382 Securities”) that would be treated as our “stock” for purposesof Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”), whichcould adversely affect our ability to utilize tax net operating losses (“NOLs”) and certain other tax losses(collectively, “Tax Benefits”) to offset our taxable income for U.S. federal income tax purposes. As ofDecember 31, 2011, we had approximately $4.1 billion of federal tax NOLs and $1.0 billion of capital losscarry-forwards, resulting in deferred tax assets of approximately $1.8 billion, expiring in years 2013 through2029. Generally, the unexpired balance of our NOLs can be used to offset tax on income (if any). However,as discussed further below, the utilization of Tax Benefits to offset taxable income can be limited in certaincircumstances. Because the amount and timing of our future taxable income cannot be accurately predicted,we cannot predict the amount of Tax Benefits that will ultimately be used to reduce our income tax liability.Although we are unable to quantify an exact value, we believe that the Tax Benefits are a very valuable assetand the Board believes it is in the Company’s best interests to attempt to prevent the imposition of limitationson their use by adopting the Amended Rights Plan.

The benefit of the Tax Benefits to the Company could be significantly reduced or eliminated if weexperience an “ownership change” within the meaning of Section 382 of the Code (an “Ownership Change”).

45

An Ownership Change can occur through one or more acquisitions of our stock, whether or not occurringpursuant to a single plan, by which shareholders or groups of shareholders, each of whom owns or is deemedto own directly or indirectly at least 5% of our stock, increase their aggregate ownership of our stock by morethan 50 percentage points over their lowest aggregate percentage interest within a rolling three-year period.See “— Section 382 Ownership Shift Calculations” below for additional detail. If that were to happen, wewould only be allowed to use a limited amount of Tax Benefits to offset our taxable income subsequent to anOwnership Change (the “Annual 382 Limitation”).

The Annual 382 Limitation is obtained by multiplying (i) the aggregate value of our outstanding equityimmediately prior to the Ownership Change (reduced by certain capital contributions made during theimmediately preceding two years and certain other items) by (ii) the federal long-term tax-exempt rate (asdefined by Section 382 of the Code and regularly published by the Internal Revenue Service (the “IRS”)) ineffect for the month of the Ownership Change. The Annual 382 Limitation is subject to certain adjustmentsand limitations. If we were to experience an Ownership Change at our current stock price levels, we believe wewould be subject to an annual Tax Benefits limitation which would result in a material amount of NOLs expiringunused, resulting in a significant impairment to the Company’s deferred tax assets. Additionally, the writedownof our deferred tax assets that would occur in the event of an Ownership Change for purposes of Section 382could cause us to breach the debt to total capitalization covenant in our senior secured credit facility.

If the Company were to have taxable income in excess of the Annual 382 Limitation following anOwnership Change, it would not be able to utilize Tax Benefits to offset the tax liability on the excess oftaxable income over the Annual 382 Limitation. Although any Tax Benefits not used as a result of the Annual382 Limitation would remain available to offset taxable income in future years (subject to the Annual 382Limitation) until the expiration of such Tax Benefits, an Ownership Change could (i) significantly defer theutilization of such Tax Benefits, (ii) accelerate payment of tax liabilities and (iii) result in the expiration ofcertain Tax Benefits prior to their utilization. Because the aggregate value of our outstanding Common Stockand the federal long-term tax-exempt interest rate fluctuate, it is impossible to predict with any accuracy theAnnual 382 Limitation which would apply upon an Ownership Change, but such limitation could be material.

Currently, we do not believe that we have experienced an Ownership Change, but calculating whether anOwnership Change has occurred is subject to inherent uncertainty. This uncertainty results from thecomplexity of the Section 382 provisions, as well as limitations on the knowledge that any publicly tradedcompany can have about the ownership of and transactions in its securities. However, we and our advisorshave analyzed the information available, along with various scenarios of possible future changes of ownership.Taking into account, among other things, the issuance and sale of shares of common stock and warrants toPaulson & Co. Inc. and our public offering of common stock in December 2009, as well as our current stockprice and daily trading volume, among other factors, we believe that if no actions were taken it is possiblethat we would undergo an Ownership Change.

In April 2010, the Company’s shareholders approved an amendment to the Company’s Amended andRestated Certificate of Incorporation (the “NOL Protective Amendment”). Although the NOL ProtectiveAmendment is designed to assist in protecting the NOLs by preventing certain transfers of stock which wouldotherwise adversely affect our ability to use the Tax Benefits, there still remains a risk that certain changes inrelationships among shareholders or other events would cause an Ownership Change. We also cannot assure youthat the NOL Protective Amendment is enforceable under all circumstances, particularly against shareholderswho did not vote in favor of the NOL Protective Amendment proposal at our 2010 Annual Meeting.

The Amended Rights Plan is not designed to protect shareholders against the possibility of a hostiletakeover. Instead, it is meant to protect shareholder value by attempting to preserve our ability to use the TaxBenefits. Because of the significant value of the Tax Benefits to the Company, the Board believes it is in thebest interest of the Company and its shareholders to approve the adoption of the Amended Rights Plan. OurBoard has unanimously approved the Amended Rights Plan and unanimously recommends that shareholdersapprove the Amended Rights Plan at the Annual Meeting.

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The description of the Amended Rights Plan in this proxy statement is qualified in its entirety byreference to the text of the Amended Rights Plan, which is attached hereto as Annex A and is incorporated byreference herein. You are urged to read carefully the Amended Rights Plan in its entirety as thediscussion in this proxy statement is only a summary.

Section 382 Ownership Change Calculations

Generally, an Ownership Change can occur through one or more acquisitions by which one or moreshareholders, each of whom owns or is deemed to own directly or indirectly 5% or more in value of acorporation’s stock, increase their aggregate percentage ownership by more than 50 percentage points over thelowest percentage of stock owned by such shareholders at any time during the preceding rolling three-yearperiod. The amount of the increase in the percentage of stock ownership (measured as a percentage of thevalue of the company’s outstanding shares rather than voting power) of each “5-percent shareholder” (withinthe meaning of Section 382) is computed separately, and each such increase is then added together with anyother such increases to determine whether an Ownership Change has occurred.

For example, if a single investor acquired 50.1% of our stock in a three-year period, an OwnershipChange would occur. Similarly, if ten persons, none of whom owned our stock, each acquired slightly over5% of our stock within a three-year period (so that such persons owned, in the aggregate, more than 50%), anOwnership Change would occur.

In determining whether an Ownership Change has occurred, the rules of Section 382 are very complexand are beyond the scope of this summary discussion. Some of the factors that must be considered indetermining whether an Ownership Change has occurred include the following:

v All holders who each own less than 5% of a company’s Company 382 Securities are generally (but notalways) treated as a single “5-percent shareholder.” Transactions in the public markets amongstockholders who are not “5-percent shareholders” are generally (but not always) excluded from thecalculation.

v There are several rules regarding the aggregation and segregation of stockholders who otherwise do notqualify as “5-percent shareholders.”

v Acquisitions by a person which cause that person to become a “5-percent shareholder” generally resultin a five percentage (or more) point change in ownership, regardless of the size of the final purchase(s)that caused the threshold to be exceeded.

v Certain constructive ownership rules, which generally attribute ownership of Company 382 Securitiesowned by estates, trusts, corporations, partnerships or other entities to the ultimate indirect individualowner thereof, or to related individuals, are applied in determining the level of Company 382 Securitiesownership of a particular holder. Special rules can result in the treatment of options (includingwarrants) or other similar interests as having been exercised if such treatment would result in anOwnership Change.

v The redemption or buyback of shares by an issuer will increase the ownership of any “5-percentshareholders” (including groups of stockholders who are not themselves “5-percent shareholders”) andcan contribute to an Ownership Change. In addition, it is possible that a redemption or buyback ofshares could cause a holder of less than 5% to become a “5-percent shareholder,” resulting in a fivepercentage (or more) point change in ownership.

Shareholders are advised to carefully monitor their ownership of our Company 382 Securities and consultwith their own legal advisors to determine whether their ownership of our Company 382 Securities approachesthe proscribed level.

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Description of Amended Rights Plan

The Amended Rights Plan is intended to act as a deterrent to any person or group acquiring 4.99% ormore of our outstanding Common Stock or any other class of Company 382 Securities then outstanding (an“Acquiring Person”) without the approval of our Board of Directors. Shareholders who owned 4.99% or moreof the Company’s outstanding Common Stock as of the close of business on December 6, 2011 will nottrigger the Amended Rights Plan so long as they do not (i) acquire additional shares of Common Stock orother interests in Company 382 Securities representing more than 1% of the Company 382 Securities thenoutstanding or (ii) fall under 4.99% ownership of the shares of Common Stock or any other class of Company382 Securities and then re-acquire 4.99% or more of the Common Stock or any other class of Company 382Securities. Any Rights held by a person who is or becomes an Acquiring Person are void and may not beexercised or transferred. The Board of Directors may, in its sole discretion, exempt any person or group frombeing deemed an Acquiring Person for purposes of the Amended Rights Plan.

The Rights. Subject to the terms, provisions and conditions of the Amended Rights Plan, if the Rightsbecome exercisable, each Right would initially represent the right to purchase from us one one-thousandth ofa share of our Series B Junior Participating Preferred Stock, par value $0.01 per share (the “Series B PreferredStock”) for a purchase price of $25.00 (the “Purchase Price”). If issued, each fractional share of Series BPreferred Stock would give the shareholder approximately the same dividend, voting and liquidation rights asdoes one share of Common Stock. However, prior to exercise or exchange as provided in the Amended RightsPlan, a Right does not give its holder any rights as a shareholder, including without limitation any dividend,voting or liquidation rights.

Exercisability. The Rights will not be exercisable until the earlier of (i) 10 business days after the firstdate of a public announcement that a person or group (other than an Exempted Person within the meaning theAmended Rights Plan) has become an Acquiring Person and (ii) 10 business days (or such later date as maybe determined by the Board by action prior to such person or group becoming an Acquiring Person) after thedate of commencement of, or the first public announcement of an intention to commence, a tender offer orexchange offer, the consummation of which would result in any person (other than an Exempted Person)becoming an Acquiring Person. We refer to the date that the Rights become exercisable as the “DistributionDate.” Until the Distribution Date, Common Stock certificates will evidence the Rights and may contain anotation to that effect. Any transfer of shares of Common Stock prior to the Distribution Date will constitute atransfer of the associated Rights. After the Distribution Date, the Rights may be transferred other than inconnection with the transfer of the underlying shares of Common Stock.

After the Distribution Date, each holder of a Right, other than Rights beneficially owned by anyAcquiring Person (which will thereupon become void), will thereafter have the right to receive upon exerciseof a Right and payment of the Purchase Price, that number of shares of Common Stock and/or other securitiesor property having a market value of two times the Purchase Price.

Exchange. After the Distribution Date, subject to certain limitations, the Board may exchange the Rights(other than Rights owned by an Acquiring Person which will have become void), in whole or in part, at anexchange ratio of one share of Common Stock or a fractional share of Series B Preferred Stock (or of a shareof a similar class or series of our preferred stock having similar rights, preferences and privileges) ofequivalent value, per Right (subject to adjustment).

Expiration. The Rights and the Amended Rights Plan will expire on the earliest of (i) the close ofbusiness on December 6, 2014, (ii) the close of business on December 6, 2012 if shareholder approval of theAmended Rights Plan has not been received by or on such date, (iii) the adjournment of the 2012 AnnualMeeting if shareholder approval of the Amended Rights Plan has not been received prior to such time, (iv) therepeal of Section 382 or any successor statute if the Board determines that the Amended Rights Plan is nolonger necessary for the preservation of Tax Benefits or (v) the beginning of a taxable year of the Company towhich the Board determines that no Tax Benefits may be carried forward.

Redemption. At any time prior to the time an Acquiring Person becomes such, the Board may redeem theRights in whole, but not in part, at a price of $0.01 per Right, subject to adjustment to reflect stock splits,

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stock dividends or similar transactions (the “Redemption Price”) payable, at the option of the Company, incash, shares of Common Stock or such other form of consideration as the Board may determine. Theredemption of the Rights may be made effective at such time, on such basis and with such conditions as theBoard in its sole discretion may establish. Immediately upon any redemption of the Rights, the right toexercise the Rights will terminate and the only right of the holders of Rights will be to receive theRedemption Price.

Anti-Dilution Provisions. The Purchase Price payable, and the number of shares of Series B PreferredStock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from timeto time to prevent dilution that may occur as a result of certain events, including among others, a stockdividend, a stock split or a reclassification. Subject to certain exceptions, no adjustment in the Purchase Pricewill be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price.

Amendments. Before the Distribution Date, the Company may, except with respect to the RedemptionPrice, amend or supplement the Amended Rights Plan without the consent of the holders of the Rights. Afterthe Distribution Date, the Company may amend, except with respect to the Redemption Price, the AmendedRights Plan in any manner that does not adversely affect the interests of holders of the Rights.

Certain Considerations Relating to the Amended Rights Plan

Our Board believes that attempting to protect the Tax Benefits described above is in the best interests ofthe Company and our shareholders. Nonetheless, we cannot eliminate the possibility that an OwnershipChange will occur even if the Amended Rights Plan is approved. You should consider the factors below whenmaking your decision.

Continued Risk of Ownership Change. We cannot assure you that the Amended Rights Plan will beeffective in deterring all acquisitions that could result in an Ownership Change. In particular, it will notprotect against an Ownership Change resulting from purchasers of shares who become “5-percentshareholders” notwithstanding the Amended Rights Plan, either because the purchaser is unaware of theAmended Rights Plan or makes a conscious decision to discount the potential consequences under theAmended Rights Plan.

Potential IRS Challenge to the Tax Benefits. The amount of the Tax Benefits has not been audited orotherwise validated by the IRS. The IRS could challenge the amount of the Tax Benefits, which could resultin an increase in our liability in the future for income taxes. As discussed above, determining whether anOwnership Change has occurred is subject to uncertainty, both because of the complexity of the Section 382provisions and because of limitations on the knowledge that any publicly traded company can have about theownership of, and transactions in, its securities on a timely basis. Therefore, we cannot assure you that theIRS or other taxing authority will not claim that we experienced an Ownership Change and attempt to reduceor eliminate our utilization of Tax Benefits even if the Amended Rights Plan is in place.

Potential Effects on Liquidity. The Amended Rights Plan is intended to deter persons or groups ofpersons from acquiring beneficial ownership of shares of our Common Stock in excess of the specifiedlimitations. A shareholder’s ability to dispose of our Common Stock may be limited if the Amended RightsPlan reduces the number of persons willing to acquire our Common Stock or the amount they are willing toacquire.

Potential Impact on Value. It is possible that the Amended Rights Plan could deter certain buyers,including persons who wish to acquire more than 4.99% of our Common Stock, and that this could result indiminished demand for and, therefore, potentially decrease the value of our Common Stock. We believe,however, the value protected as a result of the preservation of the Tax Benefits would outweigh any suchpotential decrease in the value of our Common Stock.

Potential Anti-Takeover Effect. The Amended Rights Plan is designed to preserve the long-term value ofour accumulated Tax Benefits and is not intended to prevent a takeover of the Company. However, it could be

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deemed to have an “anti-takeover” effect because, among other things, it restricts the ability of a person,entity or group to accumulate our Common Stock above the applicable thresholds, without the approval of ourBoard. The Amended Rights Plan approval proposal is not part of a plan by us to adopt a series of anti-takeover measures, and we are not presently aware of any potential takeover transaction.

Required Vote

Approval of the Amended Rights Plan requires the affirmative vote of the majority of shares of CommonStock present in person, or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.


OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”THE APPROVAL OF THE AMENDED RIGHTS PLAN.

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PROPOSAL 3

RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers LLP (“PwC”) served as our independent registered public accounting firm for2011 and has been selected to serve as our independent registered public accounting firm for the fiscal yearending December 31, 2012. Representatives of the Company’s independent registered public accounting firmare expected to be present at the Annual Meeting, will have the opportunity to make a statement if they sodesire, and will be available to respond to appropriate questions from the shareholders.

Required Vote

Approval of the ratification of the appointment of PricewaterhouseCoopers LLP as our independentregistered public accounting firm for the fiscal year ending December 31, 2012 requires the affirmative vote ofthe majority of shares of common stock present in person, or represented by proxy, and entitled to vote on theproposal at the Annual Meeting.


OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OURINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDINGDECEMBER 31, 2012.

Fees Paid to PricewaterhouseCoopers LLP

Aggregate fees billed to the Company in the years ended December 31, 2011 and 2010, by PwC were asfollows (dollars in millions):

Year EndedDecember 31,

2011 2010

Audit fees(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.5 $3.2Audit-related fees(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 .1Tax fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —All other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.6 $3.3

(a) Audit fees were for professional services rendered for the audits of CNO’s consolidated financialstatements, statutory and subsidiary audits, issuance of comfort letters, and assistance with review ofdocuments filed with the SEC.

(b) Audit-related fees primarily include services provided for employee benefit plan audits and otherassurance-related services.

Pre-Approval Policy

The Audit and Enterprise Risk Committee has adopted a policy requiring pre-approval of all audit andpermissible non-audit services provided by our independent registered public accounting firm. These servicesmay include audit services, audit-related services, tax services and other services.

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In 2010 and 2011, all new engagements of PwC were pre-approved by the Audit and Enterprise RiskCommittee for all audit, audit-related, tax and other services.

Report of the Audit and Enterprise Risk Committee

The Audit and Enterprise Risk Committee (the “Audit Committee”) provides assistance to the Board infulfilling its responsibilities for oversight of the integrity of the financial statements, public disclosures andfinancial reporting practices of the Company, including the systems of internal controls. The Audit Committeehas sole authority to appoint or replace the Company’s independent registered public accounting firm. Theindependent registered public accounting firm reports directly to the Audit Committee.

In overseeing the preparation of the Company’s audited financial statements for the year endedDecember 31, 2011, the Audit Committee met with management and with PwC, the Company’s independentregistered public accounting firm. The Audit Committee also discussed with PwC the matters required to bediscussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1,AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Audit Committee has received from PwC the written disclosure and letter required by applicablerequirements of the Public Company Accounting Oversight Board regarding PwC’s communications with theAudit Committee concerning independence, and the Audit Committee has discussed the independence of PwCwith that firm.

Based on the reviews and discussions referenced above, the Audit Committee recommended to the Boardof Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2011 for filing with the Securities and Exchange Commission.

Submitted by the Audit and Enterprise Risk Committee:

Robert C. Greving, ChairR. Keith LongNeal C. Schneider

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PROPOSAL 4 — NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION

General

In accordance with the requirements of Section 14A of the Exchange Act (which was added by theDodd-Frank Wall Street Reform and Consumer Protection Act) and the related rules of the SEC, we areincluding in these proxy materials a separate resolution subject to shareholder vote to approve, in a non-binding advisory vote, the compensation paid to our Named Executive Officers as discussed on pages 16–44.While the results of the vote are non-binding and advisory in nature, the Board intends to carefully considerthe results of this vote. The current frequency of non-binding advisory votes on executive compensation is anannual vote and we anticipate that the next vote will be at the next Annual Meeting. The language of theresolution is as follows:

“RESOLVED, that the compensation paid to the Company’s named executive officers, asdisclosed in this proxy statement pursuant to the rules of the SEC, including the CompensationDiscussion and Analysis, compensation tables and any related narrative discussion, is herebyapproved.”

The compensation of our executive officers is based on a philosophy and a comprehensive compensationand benefits strategy developed by the Human Resources and Compensation Committee designed to rewardoverall and individual performance that drives long-term success for our shareholders. The committee strivesto provide a clear award program that allows us to attract, incentivize and retain seasoned executive talentwith significant industry experience required to continue to improve our performance and build long-termshareholder value. In considering their vote, shareholders are urged to read the section of this proxy statemententitled “Executive Compensation”, including the Compensation Discussion and Analysis, for a detaileddiscussion of how our compensation policies and practices implement our compensation philosophy.

Required Vote

The affirmative vote of the majority of shares of common stock present in person or represented byproxy and entitled to vote on the subject matter is required to approve the compensation paid to our NamedExecutive Officers. Abstentions will have the effect of a vote “against” this proposal. Broker non-votes willhave no effect on the outcome of the vote with respect to this proposal because the shares subject to thebroker non-vote will not be entitled to vote on this matter.


OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.

RELATED PARTY TRANSACTIONS

On July 1, 2011, we invested $25 million in limited partnership interests of Paulson Advantage, L.P. (the“Fund”). The Fund is managed by Paulson & Co. Inc. (“Paulson”). The Fund and other funds managed byPaulson collectively own approximately 9.7% of our outstanding shares of common stock. In addition,Paulson, on behalf of several investment funds and accounts it manages, also holds warrants to purchasefive million shares of our common stock and approximately $200 million aggregate principal amount of our7.0% Convertible Senior Debentures due 2016. Charles Murphy, a Partner with Paulson, has been one ofour directors since February 2010. Our $25 million investment was made as part of a program to invest fundsat the holding company level to generate additional non-life income and further utilize our tax losscarryforwards. The investment was approved by the Board, as required by our policy regarding related partytransactions. See “Approval of Related Party Transactions” on page 13 of this Proxy Statement.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires CNO’s directors and executive officers,and each person who is the beneficial owner of more than 10 percent of any class of CNO’s outstandingequity securities, to file with the SEC initial reports of ownership and reports of changes in ownership ofcommon stock and other equity securities of CNO. Specific due dates for these reports have been establishedby the SEC, and CNO is required to disclose any failure by such persons to file such reports for fiscal year2011 by the prescribed dates. Officers, directors and greater than 10 percent beneficial owners are required tofurnish CNO with copies of all reports filed with the SEC pursuant to Section 16(a). To CNO’s knowledge,based solely on review of the copies of the reports furnished to CNO and written representations that no otherreports were required, all filings required pursuant to Section 16(a) of the Securities Exchange Act of 1934applicable to CNO’s officers, directors and greater than 10 percent beneficial owners were timely made byeach such person during the year ended December 31, 2011.

SHAREHOLDER PROPOSALS FOR 2013 ANNUAL MEETING

Any proper proposal which a shareholder wishes to have included in the Board’s proxy statement andform of proxy for the 2013 Annual Meeting must be received by CNO by November 30, 2012. Suchproposals must meet the requirements set forth in the rules and regulations of the SEC in order to be eligiblefor inclusion in the proxy statement for the 2013 Annual Meeting. In addition to the SEC rules concerningshareholder proposals, the Company’s Bylaws establish advance notice procedures with regard to certainmatters, including shareholder nominations for directors, to be brought before a meeting of shareholders atwhich directors are to be elected. In the case of an annual meeting, notice must be received by the Secretaryof the Company not less than 60 days nor more than 90 days prior to the first anniversary of the precedingyear’s annual meeting. In the case of a special meeting of shareholders at which directors are to be elected,notice of a shareholder nomination must be received by the Secretary of the Company no later than the closeof business on the 10th day following the earlier of the day on which notice of the date of the meeting wasmailed or public disclosure of the meeting was made. A nomination will not be considered if it does notcomply with these notice procedures and the additional requirements set forth in our Bylaws. Please note thatthese bylaw requirements are separate from the SEC’s requirements to have a shareholder nomination or otherproposal included in our proxy statement. Any shareholder who wishes to submit a proposal to be acted uponat the 2013 Annual Meeting or who wishes to nominate a candidate for election as director should obtain acopy of these bylaw provisions and may do so by written request addressed to the Secretary of CNO FinancialGroup, Inc. at 11825 North Pennsylvania Street, Carmel, Indiana 46032.

ANNUAL REPORT

Access to CNO’s Annual Report for 2011 (which includes its annual report on Form 10-K as filed withthe SEC) is being provided with this proxy statement to all holders of common stock as of March 12, 2012.The Annual Report is not part of the proxy solicitation material. If you wish to receive an additional copyof the Annual Report for 2011, the Form 10-K, this Proxy Statement or the Notice without charge,please contact CNO Financial Group, Inc. Investor Relations, 11825 North Pennsylvania Street, Carmel,Indiana 46032; or by telephone (317) 817-2893 or email [email protected].

INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES

Net operating income is defined as net income before: (i) loss on extinguishment of debt, net of incometaxes; (ii) net realized investment gains or losses, net of related amortization and income taxes; (iii) fair valuechanges due to fluctuations in the interest rates used to discount embedded derivative liabilities related to ourfixed index annuities, net of related amortization and income taxes; and (iv) increases or decreases to ourvaluation allowance for deferred tax assets. Management uses this measure to evaluate performance becausethe items excluded from net operating income can be affected by events that are unrelated to the Company’sunderlying fundamentals.

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The calculation of book value per common share excludes accumulated other comprehensive income(loss) from the value of capital used to determine this measure. Management believes this non-GAAP measureis useful because it removes the volatility that arises from changes in the unrealized appreciation(depreciation) of our investments, which is primarily related to changes in interest rates and is unrelated to theCompany’s business operations.

Reconciliations of these non-GAAP measures to the corresponding GAAP measures are presented below(dollars in millions, except share and per share amounts):

Year endedDecember 31,

2011 2010

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 382.5 $ 284.6Net realized investment (gains) losses, net of related

amortization and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35.5) (12.1)Fair value changes in embedded derivative liabilities,

net of related amortization and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 —Valuation allowance for deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (143.0) (95.0)Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 4.4

Net operating income (a non-GAAP financial measure) . . . . . . . . . . . . . . . . $ 216.0 $ 181.9

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,032.6 $ 4,325.3Less accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . 625.5 238.3

Total shareholders’ equity excluding accumulated other comprehensiveincome (a non-GAAP financial measure) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,407.1 $ 4,087.0

Shares outstanding for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,304,503 251,084,174

Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20.86 $ 17.23Less accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . 2.60 .95

Book value, excluding accumulated other comprehensive income,per share (a non-GAAP financial measure) . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.26 $ 16.28

OTHER MATTERS

Management knows of no other matters which may be presented at the Annual Meeting. If any othermatters should properly come before the meeting, the persons named in the form of proxy will vote inaccordance with their best judgment on such matters.

By Order of the Board of Directors

Karl W. KindigSenior Vice President and Secretary

March 30, 2012

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ANNEX A

AMENDED AND RESTATED SECTION 382 RIGHTS AGREEMENT

CNO FINANCIAL GROUP, INC.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

as Rights Agent

Dated as of December 6, 2011

TABLE OF CONTENTS

Page

Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Section 3. Issuance of Right Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5

Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6

Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,Destroyed, Lost or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6

Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

Section 8. Cancellation and Destruction of Right Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8

Section 9. Availability of Shares of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8

Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9

Section 11. Adjustment of Purchase Price, Number and Kind of Shares and Number of Rights . . . . A-9

Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. . . . . . . . . . . . . . . . . . A-15

Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18

Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19

Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19

Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20

Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20

Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . A-20

Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21

Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22

Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24

Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24

Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25

Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

Section 28. Process to Seek Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

Section 29. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

Section 30. Benefits of this Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

Section 31. Determinations and Actions by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

Section 32. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

Section 33. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

Section 34. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

Section 35. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

Section 36. Prior Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

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INDEX OF DEFINED TERMS

Page

Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Approved Acquisition . . . . . . . . . . . . . . . . . . . . . . . A-2

Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . . . . A-21

Beneficial Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . A-2

Beneficially Own . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Book Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Close of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Common Stock Equivalents . . . . . . . . . . . . . . . . . A-11

Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Company 382 Securities . . . . . . . . . . . . . . . . . . . . . A-2

Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Equivalent Preferred Shares . . . . . . . . . . . . . . . . . A-11

Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24

Exempted Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Exemption Request . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

Final Expiration Date . . . . . . . . . . . . . . . . . . . . . . . A-3

Grandfathered Person . . . . . . . . . . . . . . . . . . . . . . . A-3

Invalidation Time . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

NOLs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Page

Original Rights Agreement . . . . . . . . . . . . . . . . . . A-1

Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Principal Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16

Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

Requesting Person . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Right Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Section 11(a)(ii) Trigger Date . . . . . . . . . . . . . . . A-11

Section 382 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

Stock Acquisition Date . . . . . . . . . . . . . . . . . . . . . . A-3

Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Substitution Period . . . . . . . . . . . . . . . . . . . . . . . . . . A-11

Summary of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Tax Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Threshold Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13

Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . . A-4

Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24

Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24

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AMENDED AND RESTATED SECTION 382 RIGHTS AGREEMENT

This Amended and Restated Section 382 Rights Agreement, dated as of December 6, 2011 (asamended, supplemented or otherwise modified from time to time, the “Rights Agreement”) between CNOFinancial Group, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & TrustCompany, LLC, as rights agent (the “Rights Agent”), amends and restates that certain Section 382 RightsAgreement, dated January 20, 2009 (the “Original Rights Agreement”) between the Company and theRights Agent.

WHEREAS, (a) the Company and certain of its Subsidiaries (as defined below) have generated netoperating losses for United States federal income tax purposes (“NOLs”); (b) such NOLs may potentiallyprovide valuable Tax Benefits (as defined below) to the Company; (c) the Company desires to avoid an“ownership change” within the meaning of Section 382 (as defined below), and thereby preserve the abilityto utilize such Tax Benefits; and (d) in furtherance of such objective, the entered into the Original RightsAgreement;

WHEREAS, in connection with the adoption of the Original Rights Agreement, the Board ofDirectors of the Company on January 20, 2009 authorized and declared a dividend of one preferred sharepurchase right (a “Right”) for each share of Common Stock (as defined below) of the Company outstanding asof the Close of Business (as defined below) on January 30, 2009 (the “Record Date”), each Right representingthe right to purchase one one-thousandth (subject to adjustment) of a share of Preferred Stock (as definedbelow), upon the terms and subject to the conditions set forth in the Original Rights Agreement, and theBoard of Directors further authorized and directed the issuance of one Right (subject to adjustment asprovided herein) with respect to each share of Common Stock that shall become outstanding between theRecord Date and the earlier of the Distribution Date and the Expiration Date (as such terms are hereinafterdefined); provided, however, that Rights may be issued with respect to shares of Common Stock that shallbecome outstanding after the Distribution Date and prior to the Expiration Date in accordance with Section 22;

WHEREAS, the Board of Directors has determined it is in the best interests of the Company and itsstockholders to extend the term of the Original Rights Agreement and to amend certain other provisionstherein; and

WHEREAS, pursuant to Section 27 of the Original Rights Agreement, the Board of Directors hasauthorized and approved the amendment and restatement of the Original Rights Agreement, and an appropriateofficer of the Company has delivered a certificate to the Rights Agent in accordance with Section 27 of theOriginal Rights Agreement.

NOW THEREFORE, in consideration of the premises and the mutual agreements herein set forth,the parties hereby agree as follows:

Section 1. Certain Definitions. For purposes of this Rights Agreement, the following terms have themeaning indicated:

(a) “Acquiring Person” shall mean any Person (as defined below) who is or shall have become aThreshold Holder (as defined below), whether or not such Person continues to be a Threshold Holder, butshall not include (i) an Exempted Person (as defined below), or (ii) any Grandfathered Person (as definedbelow); provided, however, that a Person will not be deemed to have become an Acquiring Person solely asa result of (x) a reduction in the number of shares of Common Stock or any other class of Company 382Securities outstanding, (y) the exercise of any options, warrants, rights or similar interests (including restrictedstock) granted by the Company to its directors, officers and employees, or (z) any unilateral grant of anysecurity by the Company, unless and until such time as such Person thereafter acquires beneficial ownershipof any additional shares of Common Stock or additional shares of any class of Company 382 Securities (otherthan Common Stock), as applicable. Notwithstanding the foregoing, the Board of Directors may, in its solediscretion, determine that any Person shall not be deemed to be an “Acquiring Person” for any purposes ofthis Rights Agreement.

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(b) “Affiliate” and “Associate” shall mean, with respect to any Person, any other Person whosecommon stock would be deemed to be (i) constructively owned by such first Person, or (ii) otherwiseaggregated with the shares owned by such first Person (other than aggregation solely by reason of such sharesbeing part of the same “public group” as defined under Treasury Regulation Section 1.382-2T(f)(13), in eachcase pursuant to the provisions of Section 382, or any successor or replacement provision, and the TreasuryRegulations promulgated thereunder.

(c) “Approved Acquisition” shall mean (i) any acquisition of Company 382 Securities that wouldcause a Person to qualify as a Threshold Holder and that is approved in advance by the Board of Directors, or(ii) a conversion (or other exchange) of Company 382 Securities for other Company 382 Securities wheresuch conversion (or other exchange) does not increase the Beneficial Ownership in the Company by anyPerson for purposes of Section 382.

(d) Except as may expressly be set forth elsewhere herein, a Person shall be deemed the “BeneficialOwner” of, shall be deemed to have “Beneficial Ownership” of and shall be deemed to “Beneficially Own”any securities which such Person: (i) directly owns, or (ii) would be deemed to own constructively pursuantto Section 382 and the Treasury Regulations promulgated thereunder (including as a result of the deemedexercise of an “option” pursuant to Treasury Regulation Section 1.382-4(d) and including, without duplication,Company 382 Securities, as applicable, owned by any Affiliate or Associate of such Person); provided, that, aPerson shall not be treated as “Beneficially Owning” Company 382 Securities pursuant to clause (i) above tothe extent that such Person is acting solely in a fiduciary capacity in respect of such Company 382 Securitiesand does not have the right to receive or the power to direct the receipt of dividends from, or the proceedsfrom the sale of, Company 382 Securities.

(e) “Book Entry” shall mean an uncertificated book entry for the shares of Common Stock.

(f) “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which bankinginstitutions in the State of Indiana, or the State in which the principal office of the Rights Agent is located, areauthorized or obligated by law or executive order to close.

(g) “Close of Business” on any given date shall mean 5:00 P.M., New York, New York time, onsuch date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York, NewYork time, on the next succeeding Business Day.

(h) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or anycomparable successor statute.

(i) “Common Stock” when used with reference to the Company shall mean the common stock, parvalue $0.01 per share, of the Company. “Common Stock” when used with reference to any Person other thanthe Company shall mean the capital stock (or, in the case of an entity other than a corporation, the equivalentequity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary ofanother Person, the Person or Persons which ultimately control such first-mentioned Person.

(j) “Company 382 Securities” shall mean the Common Stock of the Company and any other interestthat would be treated as “stock” of the Company for purposes of Section 382 (including pursuant to TreasuryRegulation Section 1.382-2T(f)(18)).

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(l) “Exempted Person” shall mean (i) the Company, (ii) any Subsidiary (as defined below) of theCompany, (in the case of subclauses (i) and (ii) including, without limitation, in its fiduciary capacity),(iii) any employee benefit plan or compensation arrangement of the Company or of any Subsidiary of theCompany (iv) any entity or trustee holding (or acting in a fiduciary capacity in respect of) Company 382Securities to the extent organized, appointed or established by the Company or any Subsidiary of theCompany for or pursuant to the terms of any such plan or for the purpose of funding any such employeebenefit plan or compensation arrangement, (v) any Person (together with its Affiliates and Associates) whose

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status as a Threshold Holder will, in the sole judgment of the Board of Directors, not jeopardize or endangerthe availability to the Company of its NOL carryforwards to be used to offset its taxable income in such yearor future years (but in the case of any Person determined by the Board of Directors to be an Exempted Personpursuant to this subparagraph (l)(v) only for so long as such Person’s status as a Threshold Holder continuesnot to jeopardize or endanger the availability of such NOL carryforwards, as determined by the Board ofDirectors in its good faith discretion), or (vi) any Person who or which would qualify as a Threshold Holderas a result of an Approved Acquisition and, to the extent approved by the Board of Directors, any Person whoor which acquires Company 382 Securities from any such Person.

(m) “Final Expiration Date” shall mean the earliest to occur of (i) the Close of Business onDecember 6, 2014 (ii) the Close of Business on December 6, 2012 if stockholder approval of this RightsAgreement has not been received by or on such date, (iii) the adjournment of the first annual meeting of thestockholders of the Company following the date hereof if stockholder approval of this Rights Agreement hasnot been received prior to such time, (iv) the repeal of Section 382 or any successor statute if the Board ofDirectors determines that this Rights Agreement is no longer necessary for the preservation of Tax Benefits or(v) the beginning of a taxable year of the Company to which the Board of Directors determines that no TaxBenefits may be carried forward.

(n) “Grandfathered Person” shall mean any Person who or which, together with all Affiliates andAssociates of such Person, was on the date hereof, the Beneficial Owner of 4.99% or more of the Company382 Securities outstanding on such date, unless and until such time as such Person after the date of this RightsAgreement acquires beneficial ownership of additional shares or other interests in Company 382 Securitiesrepresenting more than 1% of the Company 382 Securities then outstanding. Any Grandfathered Person who,together with all of its Affiliates and Associates, subsequently becomes the Beneficial Owner of less than4.99% of the Company 382 Securities shall cease to be a Grandfathered Person.

(o) “NYSE” shall mean the New York Stock Exchange, Inc.

(p) “Person” shall mean any individual, firm, corporation, business trust, joint stock company,partnership, trust association, limited liability company, limited partnership, or other entity, or any group ofPersons making a “coordinated acquisition” of Company 382 Securities or otherwise treated as an entitywithin the meaning of Treasury Regulation Section 1.382-3(a)(1)(i), or otherwise and shall include anysuccessor (by merger or otherwise) of any such entity.

(q) “Preferred Stock” shall mean the Series B Junior Participating Preferred Stock, par value $0.01per share, of the Company having the rights and preferences set forth in the Form of Certificate ofDesignations attached to this Rights Agreement as Exhibit A and, to the extent that there is a not sufficientnumber of shares of the Series B Junior Participating Preferred Stock authorized to permit the full exercise ofthe Rights, any other series of preferred stock of the Company designated for such purpose containing termssubstantially similar to the terms of the Series B Junior Participating Preferred Stock.

(r) “Section 382” shall mean Section 382 of the Code, or any comparable successor provision.

(s) “Securities Act” shall mean the Securities Act of 1933, as amended.

(t) “Stock Acquisition Date” shall mean the first date of public announcement (which for purposesof this definition shall include, without limitation, a report filed pursuant to Section 13(d), Section 13(f) orSection 13(g) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person hasbecome such or that discloses information which reveals the existence of an Acquiring Person, or such earlierdate as a majority of the Board of Directors becomes aware of the existence of an Acquiring Person.

(u) “Subsidiary” of any Person shall mean any corporation or other entity of which securities orother ownership interests having ordinary voting power sufficient to elect a majority of the board of directorsor other persons performing similar functions are beneficially owned, directly or indirectly, by such Person,and any corporation or other entity that is otherwise controlled by such Person.

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(v) “Tax Benefits” shall mean the net operating loss carryovers, capital loss carryovers, generalbusiness credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as wellas any loss or deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382, andthe Treasury Regulations promulgated thereunder, of the Company or any of its Subsidiaries.

(w) “Threshold Holder” shall mean any Person who or which, together with all Affiliates andAssociates of such Person, is the Beneficial Owner of 4.99% or more of the shares of Common Stock or anyother class of Company 382 Securities then outstanding.

(x) “Treasury Regulations” shall mean any income tax regulations promulgated under the Code,including any amendments thereto.

Any determination required by the definitions in this Rights Agreement shall be made by the Board ofDirectors in its good faith judgment, which determination shall be binding on the Rights Agent and theholders of Rights.

Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act asagent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall priorto the Distribution Date also be the holders of Common Stock) in accordance with the terms and conditionshereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appointsuch co-Rights Agents as it may deem necessary or desirable upon 10 days’ prior notice to the Rights Agent.The Rights Agent shall have no duty to supervise, and shall in no event be liable for the acts or omissions ofany such co-Rights Agent.

Section 3. Issuance of Right Certificates. (a) Until the Close of Business on the earlier of (i) thetenth Business Day after the Stock Acquisition Date (or, if the Stock Acquisition Date occurs before theRecord Date, the Close of Business on the Record Date) or (ii) the tenth Business Day (or such later dateas may be determined by action of the Board of Directors prior to such time as any Person becomes anAcquiring Person) after the date of the commencement by any Person (other than an Exempted Person) of,or of the first public announcement of the intention of such Person (other than an Exempted Person) tocommence, a tender or exchange offer the consummation of which would result in any Person (other than anExempted Person) becoming an Acquiring Person (irrespective of whether any shares are actually purchasedpursuant to any such offer) (including, in the case of both clause (i) and (ii), any such date which is after thedate of this Rights Agreement and prior to the issuance of the Rights) (the earlier of such dates being hereinreferred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions ofSection 3(b) hereof) by the certificates representing the Common Stock registered in the names of the holdersthereof (or by Book Entry shares in respect of such Common Stock) and not by separate Right Certificates (asdefined below), and (y) the Rights will be transferable only in connection with the transfer of Common Stock.As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agentwill countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested,send) by first-class, postage-prepaid mail, to each record holder of Common Stock as of the Close of Businesson the Distribution Date (other than any Acquiring Person or any Associate or Affiliate of an AcquiringPerson), at the address of such holder shown on the records of the Company, a Right Certificate, in substantiallythe form of Exhibit B hereto (a “Right Certificate”), evidencing one Right (subject to adjustment as providedherein) for each share of Common Stock so held. In the event that an adjustment in the number of Rightsper share of Common Stock has been made pursuant to Section 11 or 13 hereof, at the time of distributionof the Right Certificates, the Company shall make the necessary and appropriate rounding adjustments (inaccordance with Section 14(a) hereof), so that Right Certificates representing only whole numbers of Rightsare distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, theRights will be evidenced solely by such Right Certificates.

(b) In connection with the adoption of the Original Rights Agreement, the Company sent a copyof a Summary of Rights to Purchase Shares of Preferred Stock (the “Summary of Rights”), by first-class,postage-prepaid mail, to each record holder of Common Stock and holder of Book Entry shares as of the

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Close of Business on the Record Date, at the address of such holder shown on the records of the Company asthe address at which such holder has consented to receive notice. With respect to shares of Common Stockoutstanding as of the Record Date, until the Distribution Date, the Rights associated with such shares will beevidenced by the share certificate for such shares of Common Stock registered in the names of the holdersthereof or the Book Entry shares, in each case together with the Summary of Rights, in substantially the formof Exhibit C hereto. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for transferof any certificate for Common Stock or Book Entry shares outstanding on the Record Date, with or without acopy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the shares ofCommon Stock represented by such certificate or Book Entry shares.

(c) Rights shall be issued in respect of all shares of Common Stock issued or disposed of(including, without limitation, upon disposition of Common Stock out of treasury stock or issuance orreissuance of Common Stock out of authorized but unissued shares) after the Record Date but prior to theearlier of the Distribution Date and the Expiration Date, or in certain circumstances provided in Section 22hereof, after the Distribution Date. Certificates issued for Common Stock (including, without limitation, upontransfer of outstanding Common Stock, disposition of Common Stock out of treasury stock or issuance orreissuance of Common Stock out of authorized but unissued shares) after the Record Date but prior to theearlier of the Distribution Date and the Expiration Date shall have impressed on, printed on, written on orotherwise affixed to them a legend substantially to the effect of the following:

This certificate also evidences and entitles the holder hereof to certain rights as set forth inthe Amended and Restated Section 382 Rights Agreement between CNO Financial Group,Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent, dated as ofDecember 6, 2011 as the same may be amended, supplemented or otherwise modified fromtime to time (the “Rights Agreement”), the terms of which are hereby incorporated hereinby reference and a copy of which is on file at the principal executive offices of CNOFinancial Group, Inc. Under certain circumstances, as set forth in the Rights Agreement,such Rights will be evidenced by separate certificates and will no longer be evidenced bythis certificate. CNO Financial Group, Inc. will mail to the holder of this certificate a copyof the Rights Agreement without charge after receipt of a written request therefor. Undercertain circumstances, as set forth in the Rights Agreement, Rights owned by or transferredto any Person who is or becomes an Acquiring Person (as defined in the RightsAgreement) and certain transferees thereof will become null and void and will no longerbe transferable.

With respect to any Book Entry shares of Common Stock, such legend shall be included in a notice to theregistered holder of such shares in accordance with applicable law. With respect to such certificates containingthe foregoing legend, or any notice of the foregoing legend delivered to holders of Book Entry shares, untilthe Distribution Date, the Rights associated with the Common Stock represented by such certificates or BookEntry shares shall be evidenced by such certificates or Book Entry shares alone, and the surrender for transferof any such certificate or Book Entry share, except as otherwise provided herein, shall also constitute thetransfer of the Rights associated with the Common Stock represented thereby. In the event that the Companypurchases or otherwise acquires any Common Stock after the Record Date but prior to the Distribution Date,any Rights associated with such Common Stock shall be deemed cancelled and retired so that the Companyshall not be entitled to exercise any Rights associated with the shares of Common Stock which are no longeroutstanding.

Notwithstanding this Section 3(c), neither the omission of a legend nor the failure to deliver thenotice of such legend required hereby shall affect the enforceability of any part of this Rights Agreement orthe rights of any holder of the Rights.

Section 4. Form of Right Certificates. The Right Certificates (and the forms of election to purchaseshares and of assignment to be printed on the reverse thereof) shall be substantially in the form set forth in

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Exhibit B hereto and may have such marks of identification or designation and such legends, summaries orendorsements printed thereon as the Company may deem appropriate and as are not inconsistent with theprovisions of this Rights Agreement, or as may be required to comply with any applicable law or with anyrule or regulation made pursuant thereto or with any rule or regulation of the NYSE or of any other stockexchange or automated quotation system on which the Rights may from time to time be listed or quoted, or toconform to usage. Subject to the provisions of this Rights Agreement, the Right Certificates shall entitle theholders thereof to purchase such number of one one-thousandths of a share of Preferred Stock as shall be setforth therein at the Purchase Price (as determined pursuant to Section 7), but the amount and type of securitiespurchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment asprovided herein.

Section 5. Countersignature and Registration. (a) The Right Certificates shall be executed on behalfof the Company by the Chief Executive Officer, the President, any of the Vice Presidents or the Treasurer ofthe Company, either manually or by facsimile signature, shall have affixed thereto the Company’s seal or afacsimile thereof and shall be attested by the Secretary or an Assistant Secretary of the Company, eithermanually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent, eithermanually or by facsimile signature, and shall not be valid for any purpose unless countersigned. In case anyofficer of the Company who shall have signed any of the Right Certificates shall cease to be such officer ofthe Company before countersignature by the Rights Agent and issuance and delivery by the Company, suchRight Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by theCompany with the same force and effect as though the Person who signed such Right Certificates had notceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Companyby any Person who, at the actual date of the execution of such Right Certificate, shall be a proper officer ofthe Company to sign such Right Certificate, although at the date of the execution of this Rights Agreementany such Person was not such an officer.

(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at an office oragency designated for such purpose, books for registration and transfer of the Right Certificates issuedhereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates,the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the RightCertificates.

Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of this Rights Agreement, at anytime after the Close of Business on the Distribution Date, and prior to the Close of Business on the ExpirationDate, any Right Certificate or Right Certificates may be transferred, split up, combined or exchanged foranother Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of oneone-thousandths of a share of Preferred Stock (or, following such time, other securities, cash or assets as thecase may be) as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase.Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or RightCertificates shall make such request in writing delivered to the Rights Agent, and shall surrender the RightCertificate or Right Certificates to be transferred, split up, combined or exchanged at the office or agency ofthe Rights Agent designated for such purpose. Thereupon the Rights Agent, subject to the provisions of thisRights Agreement, shall countersign and deliver to the Person entitled thereto a Right Certificate or RightCertificates, as the case may be, as so requested. The Company may require payment of a sum sufficient tocover any tax or governmental charge that may be imposed in connection with any transfer, split up,combination or exchange of Right Certificates.

(b) Subject to the provisions of this Rights Agreement, at any time after the Distribution Date andprior to the Expiration Date, upon receipt by the Company and the Rights Agent of evidence reasonablysatisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss,theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company’s request,reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon

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surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will makeand deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder inlieu of the Right Certificate so lost, stolen, destroyed or mutilated.

Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights. (a) Except as otherwiseprovided herein, the Rights shall become exercisable on the Distribution Date, and thereafter the registeredholder of any Right Certificate may, subject to Section 11(a)(ii) hereof and except as otherwise providedherein, exercise the Rights evidenced thereby in whole or in part upon surrender of the Right Certificate, withthe form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office oragency of the Rights Agent designated for such purpose, together with payment of the Purchase Price for eachone one-thousandth of a share of Preferred Stock (or other securities, cash or assets, as the case may be) as towhich the Rights are exercised, at any time which is both after the Distribution Date and prior to the time (the“Expiration Date”) that is the earliest of (i) the Final Expiration Date, (ii) the time at which the Rights areredeemed as provided in Section 23 hereof (the “Redemption Date”) or (iii) the time at which such Rights areexchanged as provided in Section 24 hereof.

(b) The purchase price (the “Purchase Price”) shall be initially $25.00 for each one one-thousandthof a share of Preferred Stock purchasable upon the exercise of a Right. The Purchase Price and the number ofone one-thousandths of a share of Preferred Stock or other securities or property to be acquired upon exerciseof a Right shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shallbe payable in lawful money of the United States of America in accordance with paragraph (c) of this Section 7.

(c) Except as otherwise provided herein, upon receipt of a Right Certificate representing exercisableRights, with the form of election to purchase properly completed and duly executed, accompanied by paymentof the aggregate Purchase Price for the number of shares of Preferred Stock to be purchased and an amountequal to any applicable transfer tax or charge required to be paid by the holder of such Right Certificate inaccordance with Section 6 hereof, in lawful money of the United States of America, in cash or by certifiedcheck, cashier’s check or money order payable to the order of the Company, the Rights Agent shall thereuponpromptly (i) either (A) requisition from any transfer agent of the Preferred Stock, or make available if theRights Agent is the transfer agent for the Preferred Stock, certificates for the total number of shares ofPreferred Stock to be purchased (and the Company hereby irrevocably authorizes its transfer agent to complywith all such requests), or (B) if the Company shall have elected to deposit the Preferred Stock with adepositary agent under a depositary arrangement, requisition from the depositary agent appointed by theCompany depositary receipts representing interests in the number of one one-thousandths of a share ofPreferred Stock as are to be purchased, in which case certificates for the Preferred Stock represented by suchreceipts shall be deposited by the transfer agent with the depositary agent (and the Company hereby directsany such depositary agent to comply with all such requests), (ii) when necessary to comply with this RightsAgreement (or otherwise when appropriate, as determined by the Company with notice to the Rights Agent)requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares inaccordance with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary receipts, causethe same to be delivered to or upon the order of the registered holder of such Right Certificate, registered insuch name or names as may be designated by such holder and (iv) when necessary to comply with this RightsAgreement (or otherwise when appropriate, as determined by the Company with notice to the Rights Agent),after receipt of the cash requisitioned from the Company, promptly deliver such cash, if any, to or upon theorder of the registered holder of such Right Certificate.

(d) Except as otherwise provided herein, in case the registered holder of any Right Certificate shallexercise less than all of the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent tothe exercisable Rights remaining unexercised shall be issued by the Rights Agent to the registered holder ofsuch Right Certificate or to his, her or its duly authorized assigns, subject to the provisions of Section 14hereof.

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(e) Notwithstanding anything in this Rights Agreement to the contrary, neither the Rights Agent northe Company shall be obligated to undertake any action with respect to a registered holder of Rights upon theoccurrence of any purported transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7unless such registered holder shall have (i) completed and signed the certificate contained in the form ofassignment or form of election to purchase set forth on the reverse side of the Right Certificate surrenderedfor such transfer or exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner(for the purposes of this Section 7(e), as such term is defined in Rule 13d-3 or 13d-5 of the General Rulesand Regulations under the Exchange Act), former Beneficial Owner and/or Affiliates or Associates (forpurposes of this Section 7(e), as such terms are respectively defined for purposes of Rule 12b-2 of the GeneralRules and Regulations under the Exchange Act) thereof as the Company shall reasonably request.

Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered forthe purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or toany of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered tothe Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except asexpressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to theRights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other RightCertificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agentshall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company,destroy or cause to be destroyed such cancelled Right Certificates, and in such case shall deliver a certificateof destruction thereof to the Company.

Section 9. Availability of Shares of Preferred Stock. (a) The Company covenants and agrees that itwill cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock orany shares of Preferred Stock held in its treasury, the number of shares of Preferred Stock that will besufficient to permit the exercise in full of all outstanding Rights.

(b) So long as the shares of Preferred Stock (and, following the time that a Person becomes anAcquiring Person, shares of Common Stock and/or other securities) issuable upon the exercise of Rights maybe listed or admitted to trading on the NYSE or listed on any other national securities exchange or quotationsystem, the Company shall use its best efforts to cause, from and after such time as the Rights becomeexercisable, all shares reserved for such issuance to be listed or admitted to trading on the NYSE or listed onany other national securities exchange or quotation system upon official notice of issuance upon such exercise.

(c) From and after such time as the Rights become exercisable, the Company shall use its bestefforts, if then necessary to permit the issuance of shares of Preferred Stock (and following the time that aPerson first becomes an Acquiring Person, shares of Common Stock and other securities) upon the exerciseof Rights, to register and qualify such shares of Preferred Stock (and following the time that a Person firstbecomes an Acquiring Person, shares of Common Stock and/or other securities) under the Securities Act andany applicable state securities or “Blue Sky” laws (to the extent exemptions therefrom are not available),cause such registration statement and qualifications to become effective as soon as possible after such filingand keep such registration and qualifications effective until the earlier of (x) the date as of which the Rightsare no longer exercisable for such securities and (y) the Expiration Date. The Company may temporarilysuspend, for a period of time not to exceed 90 days, the exercisability of the Rights in order to prepare andfile a registration statement under the Securities Act and permit it to become effective. Upon any suchsuspension, the Company shall issue a public announcement stating that the exercisability of the Rights hasbeen temporarily suspended, as well as a public announcement at such time as the suspension is no longer ineffect. Notwithstanding any provision of this Rights Agreement to the contrary, the Rights shall not beexercisable in any jurisdiction unless the requisite qualification or exemption in such jurisdiction shall havebeen obtained and until a registration statement under the Securities Act (if required) shall have been declaredeffective.

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(d) The Company covenants and agrees that it will take all such action as may be necessary toensure that all shares of Preferred Stock (and, following the time that a Person becomes an Acquiring Person,shares of Common Stock and other securities) delivered upon exercise of Rights shall, at the time of deliveryof the certificates therefor (subject to payment of the Purchase Price), be duly and validly authorized andissued and fully paid and nonassessable shares.

(e) The Company further covenants and agrees that it will pay when due and payable any and allfederal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of theRight Certificates or of any shares of Preferred Stock (or shares of Common Stock or other securities) uponthe exercise of Rights. The Company shall not, however, be required to pay any transfer tax or charge whichmay be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or theissuance or delivery of certificates or depositary receipts for the Preferred Stock (or shares of Common Stockor other securities) in a name other than that of, the registered holder of the Right Certificate evidencingRights surrendered for exercise or to issue or deliver any certificates or depositary receipts for Preferred Stock(or shares of Common Stock or other securities) upon the exercise of any Rights until any such tax or chargeshall have been paid (any such tax or charge being payable by that holder of such Right Certificate at the timeof surrender) or until it has been established to the Company’s reasonable satisfaction that no such tax orcharge is due.

Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for PreferredStock is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder ofrecord of the shares of Preferred Stock represented thereby on, and such certificate shall be dated, the dateupon which the Right Certificate evidencing such Rights was duly surrendered and payment of the PurchasePrice (and any applicable transfer taxes or charges) was made; provided, however, that if the date of suchsurrender and payment is a date upon which the Preferred Stock transfer books of the Company are closed,such Person shall be deemed to have become the record holder of such shares (fractional or otherwise) on,and such certificate shall be dated, the next succeeding Business Day on which such transfer books are open.Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled toany rights of a holder of Preferred Stock for which the Rights shall be exercisable, including, withoutlimitation, the right to vote or to receive dividends or other distributions, and shall not be entitled to receiveany notice of any proceedings of the Company, except as provided herein.

Section 11. Adjustment of Purchase Price, Number and Kind of Shares and Number of Rights. ThePurchase Price, the number of shares of Preferred Stock or other securities or property purchasable uponexercise of each Right and the number of Rights outstanding are subject to adjustment from time to time asprovided in this Section 11.

(a) (i) In the event the Company shall at any time after the date of this Rights Agreement (A)declare and pay a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide theoutstanding shares of Preferred Stock, (C) combine the outstanding shares of Preferred Stock into a smallernumber of shares of Preferred Stock or (D) issue any shares of its capital stock in a reclassification of theshares of Preferred Stock (including any such reclassification in connection with a consolidation or mergerin which the Company is the continuing or surviving corporation), except as otherwise provided in thisSection 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effectivedate of such subdivision, combination or reclassification, as the case may be, and the number and kind ofshares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Rightexercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stockwhich, if such Right had been exercised immediately prior to such date and at a time when the PreferredStock transfer books of the Company were open, the holder would have owned upon such exercise and beenentitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however,that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregatepar value of the shares of capital stock of the Company issuable upon exercise of one Right.

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(ii) Subject to Section 24 of this Rights Agreement and except as otherwise provided in thisSection 11(a)(ii) and Section 11(a)(iii), in the event that any Person becomes an Acquiring Person, eachholder of a Right shall thereafter have the right to receive, upon exercise thereof at a price equal to thethen-current Purchase Price, in accordance with the terms of this Rights Agreement and in lieu of sharesof Preferred Stock, such number of shares of Common Stock (or at the option of the Company, suchnumber of one one-thousandths of a share of Preferred Stock) as shall equal the result obtained by (x)multiplying the then-current Purchase Price by the number of one one-thousandths of a share of PreferredStock for which a Right is then exercisable and dividing that product by (y) 50% of the then-current pershare market price of the Company’s Common Stock (determined pursuant to Section 11(d) hereof) onthe date of the occurrence of such event; provided, however, that the Purchase Price (as so adjusted) andthe number of shares of Common Stock so receivable upon exercise of a Right shall thereafter be subjectto further adjustment as appropriate in accordance with this Section 11. Notwithstanding anything in thisRights Agreement to the contrary, however, from and after the time (the “Invalidation Time”) when anyPerson first becomes an Acquiring Person, any Rights that are beneficially owned by (x) any AcquiringPerson (or any Affiliate or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person(or any such Affiliate or Associate) who becomes a transferee after the Invalidation Time or (z) atransferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior toor concurrently with the Invalidation Time pursuant to either (I) a transfer from the Acquiring Person toholders of its equity securities or to any Person with whom it has any continuing agreement, arrangementor understanding, written or otherwise, regarding the transferred Rights or (II) a transfer that the Board ofDirectors has determined is part of a plan, arrangement or understanding, written or otherwise, which hasthe purpose or effect of avoiding the provisions of this paragraph, and subsequent transferees of suchPersons, shall be void without any further action and any holder of such Rights shall thereafter have norights whatsoever with respect to such Rights under any provision of this Rights Agreement. TheCompany shall use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii) arecomplied with, but shall have no liability to any holder of Right Certificates or other Person as a result ofits failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates ortransferees hereunder. From and after the Invalidation Time, no Right Certificate shall be issued pursuantto Section 3 or Section 6 hereof that represents Rights that are or have become void pursuant to theprovisions of this paragraph, and any Right Certificate delivered to the Rights Agent that representsRights that are or have become void pursuant to the provisions of this paragraph shall be cancelled. Fromand after the occurrence of an event specified in Section 13(a) hereof, any Rights that theretofore havenot been exercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable only in accordancewith Section 13 and not pursuant to this Section 11(a)(ii).

(iii) The Company may at its option substitute for a share of Common Stock issuable upon theexercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of sharesof Preferred Stock having an aggregate current market value equal to the current per share market priceof a share of Common Stock. In the event that there shall be an insufficient number of shares ofCommon Stock authorized but unissued (and unreserved) to permit the exercise in full of the Rights inaccordance with the foregoing subparagraph (ii), the Board of Directors shall, with respect to suchdeficiency, to the extent permitted by applicable law and any material agreements then in effect to whichthe Company is a party (A) determine the excess of (x) the value of the shares of Common Stockissuable upon the exercise of a Right in accordance with the foregoing subparagraph (ii) (the “CurrentValue”) over (y) the then-current Purchase Price multiplied by the number of one one-thousandths of ashare of Preferred Stock for which a Right was exercisable immediately prior to the time that theAcquiring Person became such (such excess, the “Spread”), and (B) with respect to each Right (otherthan Rights which have become void pursuant to Section 11(a)(ii)), make adequate provision to substitutefor the shares of Common Stock issuable in accordance with the foregoing subparagraph (ii) uponexercise of the Right and payment of the Purchase Price (as adjusted in accordance therewith), (1) cash,(2) a reduction in such Purchase Price, (3) shares of Preferred Stock or other equity securities of the

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Company (including, without limitation, shares or fractions of shares of preferred stock which, by virtueof having dividend, voting and liquidation rights substantially comparable to those of the shares ofCommon Stock, are deemed in good faith by the Board of Directors to have substantially the same valueas the shares of Common Stock (such shares of preferred stock and shares or fractions of shares ofpreferred stock are hereinafter referred to as “Common Stock Equivalents”)), (4) debt securities of theCompany, (5) other assets or (6) any combination of the foregoing, having a value which, when added tothe value of the shares of Common Stock actually issued upon exercise of such Right, shall have anaggregate value equal to the Current Value (less the amount of any reduction in such Purchase Price),where such aggregate value has been determined by the Board of Directors upon the advice of anationally recognized investment banking firm selected in good faith by the Board of Directors; provided,however, if the Company shall not make adequate provision to deliver value pursuant to clause (B) abovewithin 30 days following the date that the Acquiring Person became such (the “Section 11(a)(ii) TriggerDate”), then the Company shall be obligated to deliver, to the extent permitted by applicable law and anymaterial agreements then in effect to which the Company is a party, upon the surrender for exercise of aRight and without requiring payment of the Purchase Price, shares of Common Stock (to the extentavailable), and then, if necessary, such number or fractions of shares of Preferred Stock (to the extentavailable) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to theSpread. If within the 30 day period referred to above the Board of Directors shall determine in good faiththat it is likely that sufficient additional shares of Common Stock could be authorized for issuance uponexercise in full of the Rights, then, if the Board of Directors so elects, such 30 day period may beextended to the extent necessary, but not more than 90 days after the Section 11(a)(ii) Trigger Date, inorder that the Company may seek stockholder approval for the authorization of such additional shares(such 30 day period, as it may be extended, is hereinafter called the “Substitution Period”). To the extentthat the Company determines that some action need be taken pursuant to the second and/or third sentenceof this Section 11(a)(iii), the Company (x) shall provide, subject to Section 11(a)(ii) hereof and the lastsentence of this Section 11(a)(iii) hereof, that such action shall apply uniformly to all outstanding Rightsand (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period inorder to seek any authorization of additional shares and/or to decide the appropriate form of distributionto be made pursuant to such second sentence and to determine the value thereof. In the event of any suchsuspension, the Company shall issue a public announcement stating that the exercisability of the Rightshas been temporarily suspended, as well as a public announcement at such time as the suspension is nolonger in effect. For purposes of this Section 11(a)(iii), the per share value of the shares of CommonStock shall be the current per share market price (as determined pursuant to Section 11(d)(i)) on theSection 11(a)(ii) Trigger Date and the per share or fractional value of any “Common Stock Equivalent”shall be deemed to equal the current per share market price of the Common Stock on such date. TheBoard of Directors of the Company may, but shall not be required to, establish procedures to allocate theright to receive shares of Common Stock upon the exercise of the Rights among the holders of Rightspursuant to this Section 11(a)(iii).

(b) In case the Company shall fix a record date for the issuance of rights, options or warrants to allholders of Preferred Stock entitling them (for a period expiring within 45 calendar days after such record date)to subscribe for or purchase Preferred Stock (or shares having similar rights, privileges and preferences as thePreferred Stock (“Equivalent Preferred Shares”)) or securities convertible into Preferred Stock or EquivalentPreferred Shares at a price per share of Preferred Stock or Equivalent Preferred Shares (or having aconversion price per share, if a security convertible into shares of Preferred Stock or Equivalent PreferredShares) less than the then-current per share market price of the Preferred Stock (determined pursuant toSection 11(d) hereof) on such record date, the Purchase Price to be in effect after such record date shall bedetermined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, thenumerator of which shall be the number of shares of Preferred Stock and Equivalent Preferred Sharesoutstanding on such record date plus the number of shares of Preferred Stock and Equivalent Preferred Shareswhich the aggregate offering price of the total number of such shares so to be offered (and/or the aggregate

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initial conversion price of the convertible securities so to be offered) would purchase at such current marketprice, and the denominator of which shall be the number of shares of Preferred Stock and EquivalentPreferred Shares outstanding on such record date plus the number of additional shares of Preferred Stockand/or Equivalent Preferred Shares to be offered for subscription or purchase (or into which the convertiblesecurities so to be offered are initially convertible); provided, however, that in no event shall the considerationto be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock ofthe Company issuable upon exercise of one Right. In case such subscription price may be paid in a considerationpart or all of which shall be in a form other than cash, the value of such consideration shall be as determined ingood faith by the Board of Directors of the Company, whose determination shall be described in a statementfiled with the Rights Agent and which shall be binding on the Rights Agent. Shares of Preferred Stock andEquivalent Preferred Shares owned by or held for the account of the Company shall not be deemed outstandingfor the purpose of any such computation. Such adjustment shall be made successively whenever such a recorddate is fixed; and in the event that such rights, options or warrants are not so issued, the Purchase Price shall beadjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

(c) In case the Company shall fix a record date for the making of a distribution to all holders of thePreferred Stock (including any such distribution made in connection with a consolidation or merger in whichthe Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than aregular quarterly cash dividend or a dividend payable in Preferred Stock) or subscription rights or warrants(excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record dateshall be determined by multiplying the Purchase Price in effect immediately prior to such record date by afraction, the numerator of which shall be the then-current per share market price of the Preferred Stock(determined pursuant to Section 11(d) hereof) on such record date, less the fair market value (as determined ingood faith by the Board of Directors of the Company whose determination shall be described in a statementfiled with the Rights Agent and shall be binding on the Rights Agent) of the portion of such assets orevidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to oneshare of Preferred Stock, and the denominator of which shall be such current per share market price of thePreferred Stock (determined pursuant to Section 11(d) hereof); provided, however, that in no event shall theconsideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares ofcapital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be madesuccessively whenever such a record date is fixed; and in the event that such distribution is not so made, thePurchase Price shall again be adjusted to be the Purchase Price that would then be in effect if such recorddate had not been fixed.

(d) (i) Except as otherwise provided herein, for the purpose of any computation hereunder, the“current per share market price” of any security (a “Security” for the purpose of this Section 11(d)(i)) onany date shall be deemed to be the average of the daily closing prices per share of such Security for the 30consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided,however, that in the event that the current per share market price of the Security is determined during a periodfollowing the announcement by the issuer of such Security of (A) a dividend or distribution on such Securitypayable in shares of such Security or securities convertible into such shares, or (B) any subdivision,combination or reclassification of such Security, and prior to the expiration of 30 Trading Days after theex-dividend date for such dividend or distribution, or the record date for such subdivision, combination orreclassification, then, and in each such case, the current per share market price shall be appropriately adjustedto reflect the current market price per share equivalent of such Security. The closing price for each day shallbe the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closingbid and asked prices, regular way, in either case as reported by (w) the principal consolidated transactionreporting system with respect to securities listed or admitted to trading on the NYSE or, (x) if the Security isnot listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reportingsystem with respect to securities listed on the principal national securities exchange on which the Security islisted or admitted to trading or, (y) if the Security is not listed or admitted to trading on any nationalsecurities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked

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prices in the over-the-counter market, as reported by the system then in use, or, (z) if on any such date theSecurity is not so quoted or reported, the average of the closing bid and asked prices as furnished by aprofessional market maker making a market in the Security selected by the Board of Directors of theCompany. The term “Trading Day” shall mean a day on which the principal national securities exchange onwhich the Security is listed or admitted to trading is open for the transaction of business or, if the Security isnot listed or admitted to trading on any national securities exchange, a Business Day.

(ii) For the purpose of any computation hereunder, if the Preferred Stock is publicly traded, the“current per share market price” of the Preferred Stock shall be determined in accordance with themethod set forth in Section 11(d)(i). If the Preferred Stock is not publicly traded but the Common Stockis publicly traded, the “current per share market price” of the Preferred Stock shall be conclusivelydeemed to be the current per share market price of the Common Stock, as determined pursuant toSection 11(d)(i), multiplied by one thousand (appropriately adjusted to reflect any stock split, stockdividend or similar transaction occurring after the date hereof). If neither the Common Stock nor thePreferred Stock is publicly traded, “current per share market price” shall mean the fair value per shareas determined in good faith by the Board of Directors of the Company, whose determination shall bedescribed in a statement filed with the Rights Agent and shall be binding on the Rights Agent.

(e) No adjustment in the Purchase Price shall be required unless such adjustment would require anincrease or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which byreason of this Section 11(e) are not required to be made shall be carried forward and taken into account inany subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to thenearest one ten-thousandth of a share of Preferred Stock or share of Common Stock or other share or securityas the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by thisSection 11 shall be made no later than the earlier of (i) three years from the date of the transaction whichrequires such adjustment or (ii) the Expiration Date. If as a result of an adjustment made pursuant toSection 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any sharesof capital stock of the Company other than the Preferred Stock, thereafter the Purchase Price and the numberof such other shares so receivable upon exercise of a Right shall be subject to adjustment from time to timein a manner and on terms as nearly equivalent as practicable to the provisions with respect to the PreferredStock contained in Sections 11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as applicable, and theprovisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like termsto any such other shares.

(f) All Rights originally issued by the Company subsequent to any adjustment made to the PurchasePrice hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-thousandths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of theRights, all subject to further adjustment as provided herein.

(g) Unless the Company shall have exercised its election as provided in Section 11(i), upon eachadjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and 11(c), each Rightoutstanding immediately prior to the making of such adjustment shall thereafter evidence the right topurchase, at the adjusted Purchase Price, that number of one one-thousandths of a share of Preferred Stock(calculated to the nearest ten-thousandth of a share of Preferred Stock) obtained by (i) multiplying (x) thenumber of one one-thousandths of a share of Preferred Stock purchasable upon the exercise of a Rightimmediately prior to such adjustment by (y) the Purchase Price in effect immediately prior to such adjustmentof the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediatelyafter such adjustment of the Purchase Price.

(h) The Company may elect on or after the date of any adjustment of the Purchase Price or anyadjustment to the number of shares of Preferred Stock for which a Right may be exercised made pursuant toSections 11(a)(i), 11(b) or 11(c) hereof to adjust the number of Rights, in substitution for any adjustment inthe number of one one-thousandths of a share of Preferred Stock purchasable upon the exercise of a Right.

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Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for thenumber of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediatelyprior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shallbecome that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the PurchasePrice in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effectimmediately after adjustment of the Purchase Price. The Company shall make a public announcement of itselection to adjust the number of Rights, indicating the record date for the adjustment, and, if known at thetime, the amount of the adjustment to be made. Such record date may be the date on which the Purchase Priceis adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days laterthan the date of the public announcement. If Right Certificates have been issued, upon each adjustment of thenumber of Rights pursuant to this Section 11(i), the Company may, as promptly as practicable, cause to bedistributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subjectto Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of suchadjustment, or, at the option of the Company, shall cause to be distributed to such holders of record insubstitution and replacement for the Right Certificates held by such holders prior to the date of adjustment,and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights towhich such holders shall be entitled as a result of such adjustment. Right Certificates so to be distributed shallbe issued, executed and countersigned in the manner provided for herein and shall be registered in the namesof the holders of record of Right Certificates on the record date specified in the public announcement.

(i) Irrespective of any adjustment or change in the Purchase Price or the number of one one-thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the Right Certificatestheretofore and thereafter issued may continue to express the Purchase Price and the number of one one-thousandths of a share of Preferred Stock which were expressed in the initial Right Certificates issuedhereunder.

(j) Before taking any action that would cause an adjustment reducing the Purchase Price below thethen par value, if any, of the shares of Preferred Stock or other shares of capital stock issuable upon exerciseof the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, benecessary in order that the Company may validly and legally issue fully paid and nonassessable shares ofPreferred Stock or other such shares at such adjusted Purchase Price.

(k) In any case in which this Section 11 shall require that an adjustment in the Purchase Price bemade effective as of a record date for a specified event, the Company may elect to defer until the occurrenceof such event the issuing to the holder of any Right exercised after such record date the Preferred Stock,Common Stock or other capital stock or securities of the Company, if any, issuable upon such exercise overand above the Preferred Stock, Common Stock or other capital stock or securities of the Company, if any,issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided,however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencingsuch holder’s right to receive such additional shares upon the occurrence of the event requiring suchadjustment.

(l) Notwithstanding anything in this Section 11 to the contrary, the Company shall be entitled tomake such adjustments in the Purchase Price, in addition to those adjustments expressly required by thisSection 11, as and to the extent that the Board of Directors in its sole discretion shall determine to beadvisable in order that any consolidation or subdivision of the Preferred Stock, issuance (wholly for cash) ofany shares of Preferred Stock at less than the current market price, issuance (wholly for cash) of PreferredStock or securities which by their terms are convertible into or exchangeable for Preferred Stock, dividends onPreferred Stock payable in shares of Preferred Stock or issuance of rights, options or warrants referred tohereinabove in Section 11(b), hereafter made by the Company to holders of its Preferred Stock shall not betaxable to such stockholders.

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(m) Notwithstanding anything in this Rights Agreement to the contrary, in the event that at any timeafter the date of this Rights Agreement and prior to the Distribution Date, the Company shall (i) declare andpay any dividend on the Common Stock payable in Common Stock, or (ii) effect a subdivision, combinationor consolidation of the Common Stock (by reclassification or otherwise than by payment of a dividendpayable in Common Stock) into a greater or lesser number of shares of Common Stock, then in each suchcase, the number of Rights associated with each share of Common Stock then outstanding, or issued ordelivered thereafter, shall be proportionately adjusted so that the number of Rights thereafter associated witheach share of Common Stock following any such event shall equal the result obtained by multiplying thenumber of Rights associated with each share of Common Stock immediately prior to such event by a fractionthe numerator of which shall be the total number of shares of Common Stock outstanding immediately priorto the occurrence of the event and the denominator of which shall be the total number of shares of CommonStock outstanding immediately following the occurrence of such event.

(n) The Company agrees that, after the earlier of the Distribution Date or the Stock AcquisitionDate, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to take)any action if at the time such action is taken it is reasonably foreseeable that such action will diminishsubstantially or eliminate the benefits intended to be afforded by the Rights.

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment ismade as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare a certificate settingforth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) file with theRights Agent and with each transfer agent for the Common Stock and the Preferred Stock a copy of suchcertificate and (c) mail a brief summary thereof to each holder of a Right Certificate (or if prior to theDistribution Date, to each holder of a certificate representing shares of Common Stock) in accordance withSection 26 hereof (if so required under Section 25 hereof). Notwithstanding the foregoing sentence, the failureof the Company to give such notice shall not affect the validity of or the force or effect of or the requirementfor such adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on anyadjustment therein contained and shall not be deemed to have knowledge of any such adjustment unless anduntil it shall have received such certificate. Any adjustment to be made pursuant to Sections 11 or 13 hereofshall be effective as of the date of the event giving rise to such adjustment.

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event,directly or indirectly, at any time after any Person has become an Acquiring Person, (i) the Company shallmerge with and into any other Person (other than one or more of its wholly-owned Subsidiaries), (ii) anyPerson (other than one or more of its wholly-owned Subsidiaries) shall consolidate with the Company, or anyPerson (other than one or more of its wholly-owned Subsidiaries) shall merge with and into the Company andthe Company shall be the continuing or surviving corporation of such merger and, in connection with suchmerger, all or part of the Common Stock shall be changed into or exchanged for stock or other securities ofany other Person (or of the Company) or cash or any other property, or (iii) the Company shall sell or otherwisetransfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets orearning power aggregating to 50% or more of the assets or earning power of the Company and its Subsidiaries(taken as a whole) to any other Person (other than the Company or one or more of its wholly-ownedSubsidiaries), then, and in each such case, proper provision shall be made so that:

(A) each holder of record of a Right (other than Rights which have become void pursuant toSection 11(a)(ii)) shall thereafter have the right to receive, upon the exercise thereof at a price equal to thethen-current Purchase Price multiplied by the number of one one-thousandths of a share of Preferred Stock forwhich a Right was exercisable (whether or not such Right was then exercisable) immediately prior to the timethat any Person first became an Acquiring Person (each as subsequently adjusted thereafter pursuant toSections 11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i) and 11(m)), in accordance with the terms of this RightsAgreement and in lieu of Preferred Stock, such number of validly issued, fully paid and non-assessable andfreely tradeable shares of Common Stock of the Principal Party (as defined below) not subject to any liens,encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1)

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multiplying the then-current Purchase Price by the number of one one-thousandths of a share of PreferredStock for which a Right was exercisable immediately prior to the time that any Person first became anAcquiring Person (as subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c), 11(f), 11(h),11(i) and 11(m)) and (2) dividing that product by 50% of the then-current per share market price of theCommon Stock of such Principal Party (determined pursuant to Section 11(d)(i) hereof) on the date ofconsummation of such consolidation, merger, sale or transfer; provided, that the Purchase Price and thenumber of shares of Common Stock of such Principal Party issuable upon exercise of each Right shall befurther adjusted as provided in Section 11(f) of this Rights Agreement to reflect any events occurring inrespect of such Principal Party after the date of such consolidation, merger, sale or transfer;

(B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of suchconsolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this RightsAgreement;

(C) the term “Company” as used herein shall thereafter be deemed to refer to such Principal Party;and

(D) such Principal Party shall take such steps (including, but not limited to, the reservation of asufficient number of its shares of its Common Stock) in connection with such consummation of any suchtransaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly asreasonably may be, in relation to the shares of its Common Stock thereafter deliverable upon the exercise ofthe Rights; provided, that upon the subsequent occurrence of any consolidation, merger, sale or transfer ofassets or other extraordinary transaction in respect of such Principal Party, each holder of a Right shallthereupon be entitled to receive, upon exercise of a Right and payment of the Purchase Price as provided inthis Section 13(a), such cash, shares, rights, warrants and other property which such holder would have beenentitled to receive had such holder, at the time of such transaction, owned the Common Stock of the PrincipalParty receivable upon the exercise of a Right pursuant to this Section 13(a), and such Principal Party shalltake such steps (including, but not limited to, reservation of shares of stock) as may be necessary to permitthe subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights,warrants and other property.

(b) “Principal Party” shall mean:

(i) in the case of any transaction described in clauses (i) or (ii) of the first sentence of Section 13(a)hereof: (A) the Person that is the issuer of the securities into which the shares of Common Stock areconverted in such merger or consolidation, or, if there is more than one such issuer, the issuer of theshares of Common Stock of which have the greatest aggregate market value of shares outstanding, or (B)if no securities are so issued, (x) the Person that is the other party to the merger, if such Person survivessaid merger, or, if there is more than one such Person, the Person the shares of Common Stock of whichhave the greatest aggregate market value of shares outstanding or (y) if the Person that is the other partyto the merger does not survive the merger, the Person that does survive the merger (including theCompany if it survives) or (z) the Person resulting from the consolidation; and

(ii) in the case of any transaction described in clause (iii) of the first sentence in Section 13(a)hereof, the Person that is the party receiving the greatest portion of the assets or earning powertransferred pursuant to such transaction or transactions, or, if each Person that is a party to suchtransaction or transactions receives the same portion of the assets or earning power so transferred or ifthe Person receiving the greatest portion of the assets or earning power cannot be determined, whicheverof such Persons is the issuer of Common Stock having the greatest aggregate market value of sharesoutstanding;

provided, however, that in any such case described in the foregoing clause (b)(i) or (b)(ii), if the CommonStock of such Person is not at such time or has not been continuously over the preceding 12-month periodregistered under Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect Subsidiary of

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another Person the Common Stock of which is and has been so registered, the term “Principal Party” shallrefer to such other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than onePerson, and the Common Stock of all of such Persons have been so registered, the term “Principal Party”shall refer to whichever of such Persons is the issuer of Common Stock having the greatest aggregate marketvalue of shares outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formedby two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth inclauses (1) and (2) above shall apply to each of the owners having an interest in the venture as if the Personowned by the joint venture was a Subsidiary of both or all of such joint venturers, and the Principal Party ineach such case shall bear the obligations set forth in this Section 13 in the same ratio as its interest in suchPerson bears to the total of such interests.

(c) The Company shall not consummate any consolidation, merger, sale or transfer referred to inSection 13(a) hereof unless prior thereto the Company and the Principal Party involved therein shall haveexecuted and delivered to the Rights Agent an agreement confirming that the requirements of Sections 13(a)and (b) hereof shall promptly be performed in accordance with their terms and that such consolidation,merger, sale or transfer of assets shall not result in a default by the Principal Party under this RightsAgreement as the same shall have been assumed by the Principal Party pursuant to Sections 13(a) and (b)hereof and providing that, as soon as practicable after executing such agreement pursuant to this Section 13,the Principal Party will:

(i) prepare and file a registration statement under the Securities Act, if necessary, with respect to theRights and the securities purchasable upon exercise of the Rights on an appropriate form, use its bestefforts to cause such registration statement to become effective as soon as practicable after such filingand use its best efforts to cause such registration statement to remain effective (with a prospectus at alltimes meeting the requirements of the Securities Act) until the Expiration Date, and similarly complywith applicable state securities laws;

(ii) use its best efforts, if the Common Stock of the Principal Party shall be listed or admitted totrading on the NYSE or on another national securities exchange, to list or admit to trading (or continuethe listing of) the Rights and the securities purchasable upon exercise of the Rights on the NYSE or suchsecurities exchange, or, if the Common Stock of the Principal Party shall not be listed or admitted totrading on the NYSE or a national securities exchange, to cause the Rights and the securities receivableupon exercise of the Rights to be reported by such other system then in use;

(iii) deliver to holders of the Rights historical financial statements for the Principal Party whichcomply in all respects with the requirements for registration on Form 10 (or any successor form) underthe Exchange Act; and

(iv) obtain waivers of any rights of first refusal or preemptive rights in respect of the CommonStock of the Principal Party subject to purchase upon exercise of outstanding Rights.

In the event that any of the transactions described in Section 13(a) hereof shall occur at any time after theoccurrence of a transaction described in Section 11(a)(ii) hereof, the Rights which have not theretofore beenexercised shall thereafter be exercisable in the manner described in Section 13(a).

(d) In case the Principal Party has a provision in any of its authorized securities or in its certificateof incorporation or by-laws or other instrument governing its affairs, which provision would have the effectof (i) causing such Principal Party to issue (other than to holders of Rights pursuant to this Section 13), inconnection with, or as a consequence of, the consummation of a transaction referred to in this Section 13,shares of Common Stock or Common Stock Equivalents of such Principal Party at less than the then-currentmarket price per share thereof (determined pursuant to Section 11(d) hereof) or securities exercisable for, orconvertible into, Common Stock or Common Stock Equivalents of such Principal Party at less than suchthen-current market price, or (ii) providing for any special payment, tax or similar provision in connectionwith the issuance of the Common Stock of such Principal Party pursuant to the provisions of Section 13, then,

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in such event, the Company hereby agrees with each holder of Rights that it shall not consummate any suchtransaction unless prior thereto the Company and such Principal Party shall have executed and delivered to theRights Agent a supplemental agreement providing that the provision in question of such Principal Party shallhave been canceled, waived or amended, or that the authorized securities shall be redeemed, so that theapplicable provision will have no effect in connection with, or as a consequence of, the consummation of theproposed transaction.

(e) The Company covenants and agrees that it shall not, at any time after a Person first becomesan Acquiring Person, enter into any transaction of the type contemplated by Sections 13(a)(i)-(iii) hereof if(x) at the time of or immediately after such consolidation, merger, sale, transfer or other transaction thereare any rights, warrants or other instruments or securities outstanding or agreements in effect which wouldsubstantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, (y) prior to,simultaneously with or immediately after such consolidation, merger, sale, transfer or other transaction, thestockholders of the Person who constitutes, or would constitute, the Principal Party for purposes of Section 13(b)hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates orAssociates or (z) the form or nature of organization of the Principal Party would preclude or limit theexercisability of the Rights.

Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required toissue fractions of Rights (except prior to the Distribution Date in accordance with Section 11(n) hereof) or todistribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall bepaid to the registered holders of the Right Certificates with regard to which such fractional Rights wouldotherwise be issuable, an amount in cash equal to the same fraction of the current market value of a wholeRight. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closingprice of the Rights for the Trading Day immediately prior to the date on which such fractional Rights wouldhave been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, incase no such sale takes place on such day, the average of the closing bid and asked prices, regular way, ineither case as reported by (w) the principal consolidated transaction reporting system with respect to securitieslisted or admitted to trading on the NYSE or, (x) if the Rights are not listed or admitted to trading on theNYSE, as reported in the principal consolidated transaction reporting system with respect to securities listedon the principal national securities exchange on which the Rights are listed or admitted to trading or, (y) if theRights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if notso quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported bysuch system then in use or, (z) if on any such date the Rights are not so quoted or reported, the average of theclosing bid and asked prices as furnished by a professional market maker making a market in the Rightsselected by the Board of Directors of the Company. If on any such date no such market maker is making amarket in the Rights, the fair value of the Rights on such date as determined in good faith by the Board ofDirectors of the Company shall be used.

(b) The Company shall not be required to issue fractions of shares of Preferred Stock (other thanfractions which are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise ofthe Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractionswhich are integral multiples of one one-thousandth of a share of Preferred Stock). Interests in fractions ofPreferred Stock in integral multiples of one one-thousandth of a share of Preferred Stock may, at the electionof the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between theCompany and a depositary selected by it; provided, that such agreement shall provide that the holders of suchdepositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficialowners (for the purposes of this Section 14(b), as such term is defined in Rule 13d-3 or 13d-5 of the GeneralRules and Regulations under the Exchange Act) of the Preferred Stock represented by such depositaryreceipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-thousandth ofa share of Preferred Stock, the Company shall pay to the registered holders of Right Certificates at the timesuch Rights are exercised or exchanged as herein provided an amount in cash equal to the same fraction of

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the current market value of one share of Preferred Stock. For the purposes of this Section 14(b), the currentmarket value of a share of Preferred Stock shall be the closing price of a share of Preferred Stock (asdetermined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of suchexercise or exchange.

(c) The Company shall not be required to issue fractions of shares of Common Stock or todistribute certificates which evidence fractional shares of Common Stock upon the exercise or exchange ofRights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered holders ofthe Right Certificates with regard to which such fractional shares of Common Stock would otherwise beissuable an amount in cash equal to the same fraction of the current market value of a whole share ofCommon Stock. For purposes of this Section 14(c), the current market value of one share of Common Stockfor which a Right is exercisable shall be deemed to be the closing price of one share of Common Stock (asdetermined in accordance with Section 11(d)(i) hereof), for the Trading Day immediately prior to the date ofsuch exercise or exchange.

(d) The holder of a Right by the acceptance of the Right expressly waives the right to receive anyfractional Rights or any fractional shares upon exercise or exchange of a Right (except as provided above).

Section 15. Rights of Action. All rights of action in respect of this Rights Agreement, excepting therights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registeredholders of the Right Certificates (and, prior to the Distribution Date, the registered holders of theCommon Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, ofthe Common Stock), without the consent of the Rights Agent or of the holder of any other RightCertificate (or, prior to the Distribution Date, of the Common Stock), on such holder’s own behalf andfor such holder’s own benefit, may enforce, and may institute and maintain any suit, action or proceedingagainst the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rightsevidenced by such Right Certificate (or, prior to the Distribution Date, such Common Stock) in themanner provided in such Right Certificate and in this Rights Agreement. Without limiting the foregoingor any remedies available to the holders of Rights, it is specifically acknowledged that the holders ofRights would not have an adequate remedy at law for any breach of this Rights Agreement and will beentitled to specific performance of the obligations under, and injunctive relief against actual or threatenedviolations of the obligations of any Person subject to, this Rights Agreement.

Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same, consentsand agrees with the Company and the Rights Agent and with every other holder of a Right that:

(i) prior to the Distribution Date, the Rights will not be evidenced by a Right Certificate and will betransferable only in connection with the transfer of the Common Stock;

(ii) after the Distribution Date, the Right Certificates are transferable only on the registry books ofthe Rights Agent if surrendered at the office or agency of the Rights Agent designated for such purpose,duly endorsed or accompanied by a proper instrument of transfer;

(iii) the Company and the Rights Agent may deem and treat the Person in whose name the RightCertificate (or, prior to the Distribution Date, the Common Stock certificate (or Book Entry shares inrespect of Common Stock)) is registered as the absolute owner thereof and of the Rights evidencedthereby (notwithstanding any notations of ownership or writing on the Right Certificates or the CommonStock certificate (or notices provided to holders of Book Entry shares of Common Stock) made byanyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither theCompany nor the Rights Agent, subject to Section 7(e) hereof, shall be affected by any notice to thecontrary; and

(iv) notwithstanding anything in this Rights Agreement to the contrary, neither the Company nor theRights Agent shall have any liability to any holder of a Right or other Person as a result of its inability toperform any of its obligations under this Rights Agreement by reason of any preliminary or permanent

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injunction or other order, judgment, decree or ruling (whether interlocutory or final) issued by a court orby a governmental, regulatory, self-regulatory or administrative agency or commission, or any statute,rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting orotherwise restraining performance of such obligation; provided, however, that the Company must use itsreasonable best efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwiseoverturned as soon as possible.

Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any RightCertificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of thePreferred Stock or any other securities of the Company which may at any time be issuable on the exercise orexchange of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate beconstrued to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of theCompany or any right to vote for the election of directors or upon any matter submitted to stockholders at anymeeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings orother actions affecting stockholders (except as provided in this Rights Agreement), or to receive dividends orsubscription rights, or otherwise, until the Rights evidenced by such Right Certificate shall have beenexercised or exchanged in accordance with the provisions hereof.

Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to the Rights Agentreasonable compensation for all services rendered by it hereunder and, from time to time, on demand of theRights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administrationand execution of this Rights Agreement and the exercise and performance of its duties hereunder. TheCompany also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability orexpense, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent,for anything done or omitted by the Rights Agent in connection with the acceptance and administration of thisRights Agreement, including the costs and expenses of defending against any claim of liability arisingtherefrom, directly or indirectly.

(b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any actiontaken, suffered or omitted by it in connection with, its administration of this Rights Agreement in relianceupon any Right Certificate or certificate representing the Preferred Stock, the Common Stock or any othersecurities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit,letter, notice, direction, consent, certificate, statement, or other paper or document reasonably believed by it tobe genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Personor Persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof.

Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any corporation orentity into which the Rights Agent or any successor Rights Agent may be merged or with which it may beconsolidated, or any corporation or entity resulting from any merger or consolidation to which the RightsAgent or any successor Rights Agent shall be a party, or any corporation or entity succeeding to the stocktransfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be the successorto the Rights Agent under this Rights Agreement without the execution or filing of any paper or any furtheract on the part of any of the parties hereto; provided, that such corporation or entity would be eligible forappointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time suchsuccessor Rights Agent shall succeed to the agency created by this Rights Agreement, any of the RightCertificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt thecountersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and incase at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agentmay countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name ofsuch successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided inthe Right Certificates and in this Rights Agreement.

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(b) In case at any time the name of the Rights Agent shall be changed and at such time any of theRight Certificates shall have been countersigned but not delivered the Rights Agent may adopt thecountersignature under its prior name and deliver Right Certificates so countersigned; and in case at that timeany of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such RightCertificates either in its prior name or in its changed name and in all such cases such Right Certificates shallhave the full force provided in the Right Certificates and in this Rights Agreement.

Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposedby this Rights Agreement upon the following terms and conditions, by all of which the Company and theholders of Right Certificates, by their acceptance thereof, shall be bound:

(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company),and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agentas to any action taken or omitted by it in good faith and in accordance with such opinion.

(b) Whenever in the performance of its duties under this Rights Agreement the Rights Agent shalldeem it necessary or desirable that any fact or matter be proved or established by the Company prior to takingor suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be hereinspecifically prescribed) may be deemed to be conclusively proved and established by a certificate signed byany one of the Chief Executive Officer, President, any Vice President, the Treasurer or the Secretary of theCompany (each, an “Authorized Officer”) and delivered to the Rights Agent; and such certificate shall be fullauthorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions ofthis Rights Agreement in reliance upon such certificate.

(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for itsown gross negligence, bad faith or willful misconduct.

(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitalscontained in this Rights Agreement or in the Right Certificates (except its countersignature thereof) or berequired to verify the same, but all such statements and recitals are and shall be deemed to have been madeby the Company only.

(e) The Rights Agent shall not be under any responsibility in respect of the validity of this RightsAgreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) orin respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shallit be responsible for any breach by the Company of any covenant or condition contained in this RightsAgreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of theRights (including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in theterms of the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13, 23and 24, or the ascertaining of the existence of facts that would require any such change or adjustment (exceptwith respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate furnishedpursuant to Section 12, describing such change or adjustment); nor shall it by any act hereunder be deemed tomake any representation or warranty as to the authorization or reservation of any shares of Preferred Stock orother securities to be issued pursuant to this Rights Agreement or any Right Certificate or as to whether anyshares of Preferred Stock or other securities will, when issued, be validly authorized and issued, fully paid andnonassessable.

(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to beperformed, executed, acknowledged and delivered all such further and other acts, instruments and assurancesas may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agentof the provisions of this Rights Agreement.

(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to theperformance of its duties hereunder from any person reasonably believed by the Rights Agent to be one ofthe Authorized Officers, and to apply to such Authorized Officers for advice or instructions in connection with

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its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance withinstructions of any such Authorized Officer or for any delay in acting while waiting for those instructions.Any application by the Rights Agent for written instructions from the Company may, at the option of theRights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under thisRights Agreement and the date on and/or after which such action shall be taken or such omission shall beeffective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent inaccordance with a proposal included in any such application on or after the date specified in such application(which date shall not be less than five Business Days after the date any Authorized Officer of the Companyactually receives such application, unless any such Authorized Officer shall have consented in writing to anearlier date) unless, prior to taking any such action (or the effective date in the case of an omission), theRights Agent shall have received written instructions in response to such application specifying the action tobe taken or omitted.

(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent maybuy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested inany transaction in which the Company may be interested, or contract with or lend money to the Company orotherwise act as fully and freely as though it were not Rights Agent under this Rights Agreement. Nothingherein shall preclude the Rights Agent from acting in any other capacity for the Company or for any otherlegal entity.

(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it orperform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shallnot be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agentsor for any loss to the Company resulting from any such act, default, neglect or misconduct, provided, thatreasonable care was exercised in the selection and continued employment thereof.

(j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer,the certificate contained in the form of assignment or the form of election to purchase set forth on the reversethereof, as the case may be, has not been completed to certify the holder is not an Acquiring Person (or anAffiliate or Associate thereof) or a transferee thereof, the Rights Agent shall not take any further action withrespect to such requested exercise or transfer without first consulting with the Company.

Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resignand be discharged from its duties under this Rights Agreement upon 30 days’ notice in writing mailed to theCompany and, in the event that the Rights Agent or one if its affiliates is not also the transfer agent for theCompany, to each transfer agent of the Common Stock or Preferred Stock by registered or certified mail, and,following the Distribution Date, to the holders of the Right Certificates by first-class mail. The Company mayremove the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the RightsAgent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock orPreferred Stock by registered or certified mail, and, following the Distribution Date, to the holders of theRight Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise becomeincapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail tomake such appointment within a period of 30 days after giving notice of such removal or after it has beennotified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by theholder of a Right Certificate (who shall, with such notice, submit his, her or its Right Certificate for inspectionby the Company), then the registered holder of any Right Certificate may apply to any court of competentjurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by theCompany or by such a court, shall be (A) a corporation or other entity organized and doing business underthe laws of the United States or any State thereof, which is authorized under such laws to exercise corporatetrust or stock transfer powers and is subject to supervision or examination by federal or state authority andwhich has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50million or (B) an affiliate of a corporation or entity described in clause (A) of this sentence. Afterappointment, the successor Rights Agent shall be vested with the same powers, rights, duties and

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responsibilities as if it had been originally named as Rights Agent without further act or deed; but thepredecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the timeheld by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for thepurpose. Not later than the effective date of any such appointment the Company shall file notice thereof inwriting with the predecessor Rights Agent and each transfer agent of the Common Stock or Preferred Stock,and, following the Distribution Date, mail a notice thereof in writing to the registered holders of the RightCertificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shallnot affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of thesuccessor Rights Agent, as the case may be.

Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this RightsAgreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificatesevidencing Rights in such forms as may be approved by its Board of Directors to reflect any adjustment orchange in the Purchase Price and the number or kind or class of shares or other securities or propertypurchasable under the Right Certificates made in accordance with the provisions of this Rights Agreement. Inaddition, in connection with the issuance or sale of Common Stock following the Distribution Date and priorto the Expiration Date, the Company may with respect to shares of Common Stock so issued or sold (i)pursuant to the exercise of stock options, (ii) under any employee plan or arrangement, (iii) upon the exercise,conversion or exchange of securities, notes or debentures issued by the Company or (iv) pursuant to acontractual obligation of the Company, in each case existing prior to the Distribution Date, issue RightCertificates representing the appropriate number of Rights in connection with such issuance or sale.

Section 23. Redemption. (a) The Board of Directors of the Company may, at its option at any timeprior to such time as any Person first becomes an Acquiring Person, redeem all but not less than all the then-outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to reflect any stock split,stock dividend or similar transaction occurring in respect of the Common Stock of the Company after the datehereof (the redemption price hereinafter referred to as the “Redemption Price”). The redemption of the Rightsmay be made effective at such time, on such basis and with such conditions as the Board of Directors in itssole discretion may establish. The Company may, at its option, pay the Redemption Price in cash, shares ofCommon Stock (based on the current market price of the Common Stock at the time of redemption asdetermined pursuant to Section 11(d)(i) hereof) or any other form of consideration deemed appropriate by theBoard of Directors.

(b) Immediately upon the action of the Board of Directors ordering the redemption of the Rightspursuant to paragraph (a) of this Section 23 (or at such later time as the Board of Directors may establishfor the effectiveness of such redemption), and without any further action and without any notice, the rightto exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receivethe Redemption Price. The Company shall promptly give public notice of any such redemption; provided,however, that the failure to give, or any defect in, any such notice shall not affect the validity of suchredemption. Within 10 days after such action of the Board of Directors ordering the redemption of the Rights(or such later time as the Board of Directors may establish for the effectiveness of such redemption), theCompany shall mail a notice of redemption to all the holders of the then-outstanding Rights at their lastaddresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on theregistry books of the transfer agent for the Common Stock. Any notice which is mailed in the manner hereinprovided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemptionshall state the method by which the payment of the Redemption Price will be made. The failure to give noticerequired by this Section 23(b) or any defect therein shall not affect the validity of the action taken by theCompany.

(c) In the case of a redemption under Section 23(a) hereof, the Company may, at its option,discharge all of its obligations with respect to the Rights by (i) issuing a press release announcing the mannerof redemption of the Rights and (ii) mailing payment of the Redemption Price to the registered holders ofthe Rights at their last addresses as they appear on the registry books of the Rights Agent or, prior to the

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Distribution Date, on the registry books of the transfer agent of the Common Stock, and upon such action,all outstanding Right Certificates shall be void without any further action by the Company.

Section 24. Exchange. (a) The Board of Directors of the Company may, at its option, at any timeafter any Person first becomes an Acquiring Person, exchange all or part of the then-outstanding Rights(which shall not include Rights that have not become effective or that have become void pursuant to theprovisions of Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one share ofCommon Stock (or one one-thousandth of a share of Preferred Stock) per Right, appropriately adjusted toreflect any stock split, stock dividend or similar transaction occurring after the date hereof (such amount perRight being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board ofDirectors shall not be empowered to effect such exchange at any time after an Acquiring Person becomes theBeneficial Owner of shares of Common Stock aggregating 50% or more of the shares of Common Stock thenoutstanding. From and after the occurrence of an event specified in Section 13(a) hereof, any Rights thattheretofore have not been exchanged pursuant to this Section 24(a) shall thereafter be exercisable only inaccordance with Section 13 and may not be exchanged pursuant to this Section 24(a). The exchange of theRights by the Board of Directors may be made effective at such time, on such basis and with such conditionsas the Board of Directors in its sole discretion may establish. Prior to effecting an exchange pursuant to thisSection 24, the Board of Directors may direct the Company to enter into a Trust Agreement in such form andwith such terms as the Board of Directors shall then approve (the “Trust Agreement”). If the Board ofDirectors so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created bysuch agreement (the “Trust”) all of the shares of Common Stock issuable pursuant to the exchange, and allstockholders entitled to receive shares pursuant to the exchange shall be entitled to receive such shares (andany dividends or distributions made thereon after the date on which such shares are deposited in the Trust)only from the Trust and solely upon compliance with the relevant terms and provisions of the TrustAgreement.

(b) Immediately upon the effectiveness of the action of the Board of Directors of the Companyordering the exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any furtheraction and without any notice, the right to exercise such Rights shall terminate and the only right thereafter ofa holder of such Rights shall be to receive that number of shares of Common Stock equal to the number ofsuch Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give publicnotice of any such exchange and shall promptly mail a notice of any such exchange to all of the holders ofthe Rights so exchanged at their last addresses as they appear upon the registry books of the Rights Agent;provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of suchexchange. Any notice which is mailed in the manner herein provided shall be deemed given, whether or notthe holder receives the notice. Each such notice of exchange will state the method by which the exchange ofthe shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the numberof Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number ofRights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) heldby each holder of Rights.

(c) The Company may at its option substitute and, in the event that there shall not be sufficientshares of Common Stock issued but not outstanding or authorized but unissued (and unreserved) to permit anexchange of Rights for Common Stock as contemplated in accordance with this Section 24, the Companyshall substitute to the extent of such insufficiency, for each share of Common Stock that would otherwise beissuable upon exchange of a Right, a number of shares of Preferred Stock or fractions thereof (or EquivalentPreferred Shares as such term is defined in Section 11(b)) such that the current per share market price(determined pursuant to Section 11(d) hereof) of one share of Preferred Stock (or Equivalent Preferred Share)multiplied by such number or fraction is equal to the current per share market price of one share of CommonStock (determined pursuant to Section 11(d) hereof) as of the date of such exchange.

Section 25. Notice of Certain Events. (a) In case the Company shall at any time after the earlier ofthe Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend payable in stock of any

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class to the holders of its Preferred Stock or to make any other distribution to the holders of its PreferredStock (other than a regular quarterly cash dividend), (ii) to offer to the holders of its Preferred Stock rights orwarrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of anyclass or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Stock (otherthan a reclassification involving only the subdivision or combination of outstanding Preferred Stock), (iv) toeffect the liquidation, dissolution or winding up of the Company, or (v) to pay any dividend on the CommonStock payable in Common Stock or to effect a subdivision, combination or consolidation of the CommonStock (by reclassification or otherwise than by payment of dividends in Common Stock), then, in each suchcase, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, anotice of such proposed action, which shall specify the record date for the purposes of such stock dividend, ordistribution or offering of rights or warrants, or the date on which such liquidation, dissolution, reclassification,subdivision, combination, consolidation or winding up is to take place and the date of participation therein bythe holders of the Common Stock and/or Preferred Stock, if any such date is to be fixed, and such notice shallbe so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record datefor determining holders of the Preferred Stock for purposes of such action, and in the case of any such otheraction, at least 10 days prior to the date of the taking of such proposed action or the date of participation thereinby the holders of the Common Stock and/or Preferred Stock, whichever shall be the earlier.

(b) In case any event described in Section 11(a)(ii) or Section 13 shall occur then the Companyshall as soon as practicable thereafter give to each holder of a Right Certificate (or if occurring prior to theDistribution Date, the holders of the Common Stock) in accordance with Section 26 hereof, a notice of theoccurrence of such event, which notice shall describe such event and the consequences of such event toholders of Rights under Section 11(a)(ii) and Section 13 hereof.

(c) The failure to give notice required by this Section 25 or any defect therein shall not affect thevalidity of the action taken by the Company or the vote upon any such action.

Section 26. Notices. Notices or demands authorized by this Rights Agreement to be given or madeby the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently givenor made if sent by overnight delivery service or first-class mail, postage prepaid, addressed (until anotheraddress is filed in writing with the Rights Agent) as follows:

CNO Financial Group, Inc.11825 North Pennsylvania StreetCarmel, Indiana 46032Attn: Chief Financial Officer

Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Rights Agreement tobe given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall besufficiently given or made if sent by overnight delivery service or first-class mail, postage prepaid, addressed(until another address is filed in writing with the Company) as follows:

American Stock Transfer & Trust Company, LLC6201 15th AvenueBrooklyn, New York 11219Attn: Corporate Trust Department

with a copy (which shall not constitute notice) to:

American Stock Transfer & Trust Company, LLC6201 15th AvenueBrooklyn, New York 11219Attn: General Counsel

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Notices or demands authorized by this Rights Agreement to be given or made by the Company or the RightsAgent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail,postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of theCompany.

Section 27. Supplements and Amendments. Except as otherwise provided in this Section 27, for solong as the Rights are then redeemable, the Company may in its sole and absolute discretion, and the RightsAgent shall if the Company so directs, supplement or amend any provision of this Rights Agreement in anyrespect without the approval of any holders of the Rights. At any time when the Rights are no longerredeemable, except as otherwise provided in this Section 27, the Company may, and the Rights Agent shall, ifthe Company so directs, supplement or amend this Rights Agreement without the approval of any holders ofRights in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein which maybe defective or inconsistent with any other provisions herein, (iii) shorten or lengthen any time periodhereunder, or (iv) change or supplement the provisions hereunder in any manner which the Company maydeem necessary or desirable; provided, however, that no such supplement or amendment shall adversely affectthe interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of anAcquiring Person), and no such amendment may cause the Rights again to become redeemable or cause thisRights Agreement again to become amendable other than in accordance with this sentence. Notwithstandinganything contained in this Rights Agreement to the contrary, no supplement or amendment shall be madewhich decreases the Redemption Price. Upon the delivery of a certificate from an appropriate officer of theCompany which states that the supplement or amendment is in compliance with the terms of this Section 27,the Rights Agent shall execute such supplement or amendment; provided, that any supplement or amendmentthat does not amend Section 18, 19, 20 or 21 hereof or this Section 27 in a manner adverse to the RightsAgent shall become effective immediately upon execution by the Company, whether or not also executed bythe Rights Agent.

Section 28. Process to Seek Exemption. Any Person who desires to effect any acquisition ofCompany 382 Securities that might, if consummated, result in such Person (together with its Affiliates andAssociates) Beneficially Owning 4.99% or more of any class of Company 382 Securities then outstanding(or, in the case of a Grandfathered Person, additional shares of Company 382 Securities in excess of thosepermitted by the definition of Grandfathered Person) (a “Requesting Person”) may, prior to the StockAcquisition Date and in accordance with this Section 28, request that the Board of Directors grant anexemption with respect to such acquisition under this Agreement so that such Person would be deemed to bean “Exempted Person” under subsections (v) or (vi) of Section 1(l) hereof for purposes of this Agreement (an“Exemption Request”). An Exemption Request shall be in proper form and shall be delivered by registeredmail, return receipt requested, to the Secretary of the Company at the principal executive office of theCompany. To be in proper form, an Exemption Request shall set forth (i) the name and address of theRequesting Person, (ii) the number and percentage of shares of Company 382 Securities then BeneficiallyOwned by the Requesting Person, together with all Affiliates and Associates of the Requesting Person, and(iii) a reasonably detailed description of the transaction or transactions by which the Requesting Person wouldpropose to acquire Beneficial Ownership of Company 382 Securities aggregating 4.99% or more of any classof the then outstanding Company 382 Securities (or, in the case of a Grandfathered Person, additional sharesof Company 382 Securities in excess of those permitted by the definition of Grandfathered Person) and themaximum number and percentage of shares of Company 382 Securities that the Requesting Person proposesto acquire. The Board of Directors shall endeavor to respond to an Exemption Request within 30 BusinessDays after receipt of such Exemption Request; provided, that the failure of the Board of Directors to make adetermination within such period shall be deemed to constitute the denial by the Board of Directors of theExemption Request. The Requesting Person shall respond promptly to reasonable and appropriate requests foradditional information from the Company or the Board of Directors and its advisors to assist the Board ofDirectors in making its determination. The Board of Directors shall only grant an exemption in response to anExemption Request if the Board of Directors determines in its sole discretion that the acquisition of BeneficialOwnership of Company 382 Securities by the Requesting Person will not jeopardize or endanger the

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availability to the Company of its NOL carryforwards. Any exemption granted hereunder may be granted inwhole or in part, and may be subject to limitations or conditions (including a requirement that the RequestingPerson agree that it will not acquire Beneficial Ownership of shares of Company 382 Securities in excess ofthe maximum number and percentage of shares approved by the Board of Directors), in each case as and tothe extent the Board shall determine necessary or desirable to provide for the protection of the Company’sNOLs.

Section 29. Successors. All the covenants and provisions of this Rights Agreement by or for thebenefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successorsand assigns hereunder.

Section 30. Benefits of this Rights Agreement. Nothing in this Rights Agreement shall be construedto give to any Person other than the Company, the Rights Agent and the registered holders of the RightCertificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy orclaim under this Rights Agreement; but this Rights Agreement shall be for the sole and exclusive benefit ofthe Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to theDistribution Date, the Common Stock).

Section 31. Determinations and Actions by the Board of Directors. The Board of Directors of theCompany shall have the exclusive power and authority to administer this Rights Agreement and to exercisethe rights and powers specifically granted to the Board of Directors of the Company or to the Company, or asmay be necessary or advisable in the administration of this Rights Agreement, including, without limitation,the right and power to (i) interpret the provisions of this Rights Agreement and (ii) make all determinationsdeemed necessary or advisable for the administration of this Rights Agreement (including, without limitation,a determination to redeem or exchange or not redeem or exchange the Rights or to amend or not amend thisRights Agreement). All such actions, calculations, interpretations and determinations that are done or made bythe Board of Directors of the Company in good faith, shall be final, conclusive and binding on the Company,the Rights Agent, the holders of the Rights, as such, and all other parties.

Section 32. Severability. If any term, provision, covenant or restriction of this Rights Agreementor applicable to this Rights Agreement is held by a court of competent jurisdiction or other authority to beinvalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this RightsAgreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated;provided, however, that notwithstanding anything in this Rights Agreement to the contrary, if any such term,provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable andthe Board of Directors determines in its good faith judgment that severing the invalid language from thisRights Agreement would adversely affect the purpose or effect of this Rights Agreement, the right ofredemption set forth in Section 23 hereof shall be reinstated (with prompt notice to the Rights Agent) andshall not expire until the Close of Business on the tenth Business Day following the date of suchdetermination by the Board. Without limiting the foregoing, if any provision requiring a specific group ofDirectors of the Company to act is held by any court of competent jurisdiction or other authority to beinvalid, void or unenforceable, such determination shall then be made by the Board of Directors in accordancewith applicable law and the Company’s Amended and Restated Certificate of Incorporation and Amended andRestated Bylaws.

Section 33. Governing Law. This Rights Agreement and each Right Certificate issued hereundershall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall begoverned by and construed in accordance with the laws of such State applicable to contracts to be made andperformed entirely within such State.

Section 34. Counterparts. This Rights Agreement may be executed in any number of counterpartsand each of such counterparts shall for all purposes be deemed to be an original, and all such counterpartsshall together constitute but one and the same instrument. A signature to this Rights Agreement transmittedelectronically shall have the same authority, effect and enforceability as an original signature.

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Section 35. Descriptive Headings. Descriptive headings of the several sections of this RightsAgreement are inserted for convenience only and shall not control or affect the meaning or construction ofany of the provisions hereof.

Section 36. Prior Agreement. This Rights Agreement amends and restates in its entirety the OriginalRights Agreement and the terms and provisions of the Original Rights Agreement are superseded hereby.

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated RightsAgreement to be duly executed and attested, all as of the day and year first above written.


Attest: /s/ Karl W. Kindig By: /s/ Scott L. Galovic

Name: Scott L. GalovicTitle: Vice President and Treasurer

AMERICAN STOCK TRANSFER & TRUSTCOMPANY, LLC

Attest: /s/ Felix Orihuela By: /s/ Paula Caroppoli

Felix OrihuelaVice President

Name: Paula CaroppoliTitle: Senior Vice President

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EXHIBIT A

FORM

OF

CERTIFICATE OF DESIGNATIONS

OF

SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

OF


(Pursuant to Section 151 of theGeneral Corporation Law of the State of Delaware)

CNO Financial Group, Inc., a corporation organized and existing under the General CorporationLaw of the State of Delaware (the “Company”), hereby certifies that the following resolution was dulyadopted by the Board of Directors of the Company (hereinafter being referred to as the “Board of Directors”or the “Board”) as required by Section 151 of the General Corporation Law of the State of Delaware onDecember 6, 2011:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Company inaccordance with the provisions of the Company’s Amended and Restated Certificate of Incorporation,(hereinafter being referred to as the “Certificate of Incorporation”), the Board of Directors hereby creates aseries of preferred stock, par value $0.01 per share, of the Company, to be designated the “Series B JuniorParticipating Preferred Stock” and hereby adopts the resolution establishing the designations, number ofshares, preferences, voting powers and other rights, and the restrictions and limitations thereof, of the sharesof such series as set forth below:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series BJunior Participating Preferred Stock” (the “Series B Preferred Stock”) and the number of shares constitutingthe Series B Preferred Stock shall be 2,000,000. Such number of shares may be increased or decreased byresolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series BPreferred Stock to a number less than the number of shares then outstanding plus the number of sharesreserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion ofany outstanding securities issued by the Company convertible into Series B Preferred Stock.

Section 2. Dividends and Distributions

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock of theCompany (the “Preferred Stock”) (or any similar stock) ranking prior and superior to the Series B PreferredStock with respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the holdersof Common Stock, par value $0.01 per share, of the Company (the “Common Stock”) and of any other stockof the Company ranking junior to the Series B Preferred Stock, shall be entitled to receive, when, as and ifdeclared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payablein cash on the last day of January, April, July, and October in each year (each such date being referred toherein as a “Dividend Payment Date”), commencing on the first Dividend Payment Date after the firstissuance of a share or fraction of a share of Series B Preferred Stock (the “Issue Date”), in an amount pershare (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustmenthereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the

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aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than adividend payable in shares of Common Stock, declared on the Common Stock since the immediatelypreceding Dividend Payment Date or, with respect to the first Dividend Payment Date, since the first issuanceof any share or fraction of a share of Series B Preferred Stock. In the event the Company shall at any timeafter the Issue Date declare and pay any dividend on the Common Stock payable in shares of Common Stock,or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (byreclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater orlesser number of shares of Common Stock, then in each such case the amount to which holders of shares ofSeries B Preferred Stock were entitled immediately prior to such event under clause (b) of the precedingsentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number ofshares of Common Stock outstanding immediately after such event and the denominator of which is thenumber of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Company shall declare a dividend or distribution on the Series B Preferred Stock asprovided in paragraph (A) of this Section immediately after it declares a dividend or distribution on theCommon Stock (other than a dividend payable in shares of Common Stock); provided that, in the event nodividend or distribution shall have been declared on the Common Stock during the period between anyDividend Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per share on theSeries B Preferred Stock shall nevertheless be payable, when, as and if declared, on such subsequent DividendPayment Date.

(C) Dividends shall begin to accrue and be cumulative, whether or not declared, on outstandingshares of Series B Preferred Stock from the Dividend Payment Date next preceding the date of issue of suchshares, unless the date of issue of such shares is prior to the record date for the first Dividend Payment Date,in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unlessthe date of issue is a Dividend Payment Date or is a date after the record date for the determination of holdersof shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such DividendPayment Date, in either of which events such dividends shall begin to accrue and be cumulative from suchDividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares ofSeries B Preferred Stock in an amount less than the total amount of such dividends at the time accrued andpayable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the timeoutstanding. The Board of Directors may fix a record date for the determination of holders of shares of SeriesB Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which recorddate shall be not more than 60 days prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series B Preferred Stock shall have the followingvoting rights:

(A) Subject to the provision for adjustment hereinafter set forth and except as otherwise provided inthe Certificate of Incorporation or required by law, each share of Series B Preferred Stock shall entitle theholder thereof to 1,000 votes on all matters upon which the holders of the Common Stock of the Companyare entitled to vote. In the event the Company shall at any time after the Issue Date declare or pay anydividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combinationor consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by paymentof a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, thenin each such case the number of votes per share to which holders of shares of Series B Preferred Stock wereentitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, thenumerator of which is the number of shares of Common Stock outstanding immediately after such event andthe denominator of which is the number of shares of Common Stock that were outstanding immediately priorto such event.

(B) Except as otherwise provided herein, in the Certificate of Incorporation or in any othercertificate of designations creating a series of Preferred Stock or any similar stock, and except as otherwise

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required by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stockand any other capital stock of the Company having general voting rights shall vote together as one class on allmatters submitted to a vote of stockholders of the Company.

(C) Except as set forth herein, or as otherwise provided by law, holders of Series B Preferred Stockshall have no special voting rights and their consent shall not be required (except to the extent they areentitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

(D) If, at the time of any annual meeting of stockholders for the election of directors, the equivalentof six quarterly dividends (whether or not consecutive) payable on any share or shares of Series B PreferredStock are in default, the number of directors constituting the Board of Directors of the Company shall beincreased by two. In addition to voting together with the holders of Common Stock for the election of otherdirectors of the Company, the holders of record of the Series B Preferred Stock, voting separately as a class tothe exclusion of the holders of Common Stock shall be entitled at said meeting of stockholders (and at eachsubsequent annual meeting of stockholders), unless all dividends in arrears on the Series B Preferred Stockhave been paid or declared and set apart for payment prior thereto, to vote for the election of two directors ofthe Company, the holders of any Series B Preferred Stock being entitled to cast a number of votes per shareof Series B Preferred Stock as is specified in paragraph (A) of this Section 3. Each such additional directorshall serve until the next annual meeting of stockholders for the election of directors, or until his or hersuccessor shall be elected and shall qualify, or until his or her right to hold such office terminates pursuant tothe provisions of this Section 3(D). Until the default in payments of all dividends which permitted the electionof said directors shall cease to exist, any director who shall have been so elected pursuant to the provisions ofthis Section 3(D) may be removed at any time, without cause, only by the affirmative vote of the holders ofthe shares of Series B Preferred Stock at the time entitled to cast a majority of the votes entitled to be cast forthe election of any such director at a special meeting of such holders called for that purpose, and any vacancythereby created may be filled by the vote of such holders. If and when such default shall cease to exist, theholders of the Series B Preferred Stock shall be divested of the foregoing special voting rights, subject torevesting in the event of each and every subsequent like default in payments of dividends. Upon thetermination of the foregoing special voting rights, the terms of office of all persons who may have beenelected directors pursuant to said special voting rights shall forthwith terminate, and the number of directorsconstituting the Board of Directors shall be reduced by two. The voting rights granted by this Section 3(D)shall be in addition to any other voting rights granted to the holders of the Series B Preferred Stock in thisSection 3.

Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series BPreferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividendsand distributions, whether or not earned or declared, on shares of Series B Preferred Stock outstanding shallhave been paid in full, the Company shall not:

(i) declare or pay dividends, or make any other distributions, on any shares of stockranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series BPreferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any shares of stockranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with theSeries B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all suchparity stock on which dividends are payable or in arrears in proportion to the total amounts to whichthe holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock rankingjunior (either as to dividends or upon liquidation, dissolution or winding up) to the Series BPreferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire

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shares of any such junior stock in exchange for shares of any stock of the Company ranking junior(as to dividends and upon dissolution, liquidation or winding up) to the Series B Preferred Stock orrights, warrants or options to acquire such junior stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series BPreferred Stock, or any shares of stock ranking on a parity (either as to dividends or uponliquidation, dissolution or winding up) with the Series B Preferred Stock, except in accordance witha purchase offer made in writing or by publication (as determined by the Board of Directors) to allholders of such shares upon such terms as the Board of Directors, after consideration of therespective annual dividend rates and other relative rights and preferences of the respective series andclasses, shall determine in good faith will result in fair and equitable treatment among the respectiveseries or classes.

(B) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquirefor consideration any shares of stock of the Company unless the Company could, under paragraph (A) of thisSection 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series B Preferred Stock purchased or otherwiseacquired by the Company in any manner whatsoever shall be retired and cancelled promptly after theacquisition thereof. All such shares shall upon their retirement become authorized but unissued shares ofPreferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution orresolutions of the Board of Directors, subject to any conditions and restrictions on issuance set forth herein.

Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding upof the Company, no distribution shall be made (A) to the holders of the Common Stock or of shares of anyother stock of the Company ranking junior, upon liquidation, dissolution or winding up, to the Series BPreferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received$1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether ornot earned or declared, to the date of such payment, provided that the holders of shares of Series B PreferredStock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustmenthereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of sharesof Common Stock, or (B) to the holders of shares of stock ranking on a parity upon liquidation, dissolution orwinding up with the Series B Preferred Stock, except distributions made ratably on the Series B PreferredStock and all such parity stock in proportion to the total amounts to which the holders of all such shares areentitled upon such liquidation, dissolution or winding up. In the event, however, that there are not sufficientassets available to permit payment in full of the Series B liquidation preference and the liquidation preferencesof all other classes and series of stock of the Company, if any, that rank on a parity with the Series BPreferred Stock in respect thereof, then the assets available for such distribution shall be distributed ratably tothe holders of the Series B Preferred Stock and the holders of such parity shares in the proportion to theirrespective liquidation preferences. In the event the Company shall at any time after the Issue Date declare orpay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision orcombination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwisethan by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares ofCommon Stock, then in each such case the aggregate amount to which holders of shares of Series B PreferredStock were entitled immediately prior to such event under the proviso in clause (A) of the preceding sentenceshall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares ofCommon Stock outstanding immediately after such event and the denominator of which is the number ofshares of Common Stock that were outstanding immediately prior to such event.

Neither the merger or consolidation of the Company into or with another entity nor the merger orconsolidation of any other entity into or with the Company (nor the sale of all or substantially all of the assetsof the Company) shall be deemed to be a liquidation, dissolution or winding up of the Company within themeaning of this Section 6.

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Section 7. Consolidation, Merger, etc. In case the Company shall enter into any consolidation,merger, combination or other transaction in which the shares of Common Stock are converted into, exchangedfor or changed into other stock or securities, cash and/or any other property, then in any such case each shareof Series B Preferred Stock shall at the same time be similarly converted into, exchanged for or changed intoan amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times theaggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be,into which or for which each share of Common Stock is converted, exchanged or converted. In the event theCompany shall at any time after the Issue Date declare or pay any dividend on the Common Stock payable inshares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares ofCommon Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock)into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in thepreceding sentence with respect to the conversion, exchange or change of shares of Series B Preferred Stockshall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares ofCommon Stock outstanding immediately after such event and the denominator of which is the number ofshares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series B Preferred Stock shall not be redeemable fromany holder.

Section 9. Rank. The Series B Preferred Stock shall rank, with respect to the payment of dividendsand the distribution of assets upon liquidation, dissolution or winding up of the Company, junior to all otherseries of Preferred Stock and senior to the Common Stock.

Section 10. Amendment. If any proposed amendment to the Certificate of Incorporation (includingthis Certificate of Designations) would alter, change or repeal any of the preferences, powers or special rightsgiven to the Series B Preferred Stock so as to affect the Series B Preferred Stock adversely, then the holdersof the Series B Preferred Stock shall be entitled to vote separately as a class upon such amendment, and theaffirmative vote of two-thirds of the outstanding shares of the Series B Preferred Stock, voting separately as aclass, shall be necessary for the adoption thereof, in addition to such other vote as may be required by theGeneral Corporation Law of the State of Delaware.

Section 11. Fractional Shares. Series B Preferred Stock may be issued in fractions of a share thatshall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receivedividends, participate in distributions and to have the benefit of all other rights of holders of Series BPreferred Stock.

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IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Company byits and attested by its Secretary this 6th day of December, 2011.

Name:Title:

Attest:

Secretary

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EXHIBIT B

FORM OF RIGHT CERTIFICATE

Certificate No. R- Rights

NOT EXERCISABLE AFTER DECEMBER 6, 2014, OR SUCH EARLIER DATE ASPROVIDED BY THE RIGHTS AGREEMENT OR IF REDEMPTION OR EXCHANGEOCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OFTHE COMPANY, AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMSSET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY ORTRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRINGPERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAINTRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NOLONGER BE TRANSFERABLE.

Right Certificate


This certifies that [ ] or registered assigns, is the registered owner of the number ofRights set forth above, each of which entitles the owner thereof, subject to the terms, provisions andconditions of the Amended and Restated Section 382 Rights Agreement, dated as of December 6, 2011, as thesame may be amended from time to time (the “Rights Agreement”), between CNO Financial Group, Inc., aDelaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, as rights agent(the “Rights Agent”) unless the Rights evidenced hereby shall have been previously redeemed or exchangedby the Company, to purchase from the Company at any time after the Distribution Date (as such term isdefined in the Rights Agreement) and prior to 5:00 P.M., New York City time, on December 6, 2014, or suchearlier date as provided by the Rights Agreement at the office or agency of the Rights Agent designated forsuch purpose, or of its successor as Rights Agent, one one-thousandth of a fully paid non-assessable share ofSeries B Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), of theCompany, at a purchase price of $25.00 per one one-thousandth of a share of Preferred Stock (the “PurchasePrice”) payable in cash, upon presentation and surrender of this Right Certificate with the Form of Election toPurchase duly executed.

The number of Rights evidenced by this Right Certificate (and the number of one one-thousandthsof a share of Preferred Stock which may be purchased upon exercise hereof) set forth above, and the PurchasePrice set forth above, are the number and Purchase Price as of December 6, 2011, based on the PreferredStock as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the numberand kind of securities or property which may be purchased upon the exercise of each Right and the number ofRights evidenced by this Right Certificate are subject to modification and adjustment upon the happening ofcertain events.

This Right Certificate is subject to all of the terms, provisions and conditions of the RightsAgreement, which terms, provisions and conditions are hereby incorporated herein by reference and made apart hereof and to which Rights Agreement reference is hereby made for a full description of the rights,limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and theholders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive officesof the Company. The Company will mail to the holder of this Right Certificate a copy of the RightsAgreement without charge after receipt of a written request therefor.

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This Right Certificate, with or without other Right Certificates, upon surrender at the office oragency of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate orRight Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregatenumber and kind of securities or property as the Rights evidenced by the Right Certificate or RightCertificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercisedin part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or RightCertificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate (i) maybe redeemed by the Company at its option at a redemption price of $0.01 per Right or (ii) may be exchangedin whole or in part for shares of Preferred Stock or shares of the Company’s Common Stock, par value $0.01per share.

No fractional shares of Preferred Stock or Common Stock will be issued upon the exercise orexchange of any Right or Rights evidenced hereby (other than fractions of Preferred Stock which are integralmultiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, beevidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the RightsAgreement.

No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or bedeemed for any purpose the holder of the Preferred Stock or of any other securities of the Company whichmay at any time be issuable on the exercise or exchange hereof, nor shall anything contained in the RightsAgreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholderof the Company or any right to vote for the election of directors or upon any matter submitted to stockholdersat any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice ofmeetings or other actions affecting stockholders (except as provided in the Rights Agreement) or to receivedividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificateshall have been exercised or exchanged as provided in the Rights Agreement.

This Right Certificate shall not be valid or obligatory for any purpose until it shall have beencountersigned by the Rights Agent.

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WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.Dated as of , .

ATTEST: CNO FINANCIAL GROUP, INC.

By: By:

Countersigned:

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,as Rights Agent

By:

Authorized Signatory

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Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if suchholder desires to transfer the Right Certificate)

FOR VALUE RECEIVED hereby sells, assigns and transfers unto

(Please print name and address of transferee)

Rights represented by this Right Certificate, together with all right, title and interest therein, and does herebyirrevocably constitute and appoint Attorney, to transfer said Rights on the books of thewithin-named Company, with full power of substitution.

Dated: ,

Signature

Signature Guaranteed:

Signatures must be guaranteed by a bank, trust company, broker, dealer or other eligible institutionparticipating in a recognized signature guarantee medallion program.

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are notbeneficially owned by, were not acquired by the undersigned from, and are not being sold, assigned ortransferred to, an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).

Signature

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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Form of Reverse Side of Right Certificate — continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exerciseRights represented by the Right Certificate)

To the Rights Agent:

The undersigned hereby irrevocably elects to exercise ______________ Rights represented by thisRight Certificate to purchase the shares of Preferred Stock (or other securities or property) issuable upon theexercise of such Rights and requests that certificates for such shares of Preferred Stock (or such othersecurities) be issued in the name of:

(Please print name and address)

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new RightCertificate for the balance remaining of such Rights shall be registered in the name of and delivered to:

Please insert social securityor other identifying number: ____________________________________

(Please print name and address)

Dated: ,

Signature(Signature must conform to holder

specified on Right Certificate)

Signature Guaranteed:

Signatures must be guaranteed by a bank, trust company, broker, dealer or other eligible institutionparticipating in a recognized signature guarantee medallion program.

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are notbeneficially owned by, were not acquired by the undersigned from, and are not being sold, assigned ortransferred to, an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).

Signature

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Form of Reverse Side of Right Certificate — continued

---------------------------------------------------------------------------------------------------------------------------------

NOTICE

The signature in the Form of Assignment or Form of Election to Purchase, as the case may be, mustconform to the name as written upon the face of this Right Certificate in every particular, without alteration orenlargement or any change whatsoever.

In the event the certification set forth above in the Form of Assignment or the Form of Election toPurchase, as the case may be, is not completed, such Assignment or Election to Purchase will not be honored.

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EXHIBIT C

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES ANACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAINTRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BETRANSFERABLE.

SUMMARY OF RIGHTS TO PURCHASESHARES OF PREFERRED STOCK OF


On December 6, 2011, CNO Financial Group, Inc. (the “Company”) entered into an Amended andRestated Section 382 Rights Agreement dated as of December 6, 2011 (as the same may be amended fromtime to time, the “Rights Agreement”) with American Stock Transfer & Trust Company, LLC, as rights agent(the “Rights Agent”). The Board of Directors of the Company had previously declared a dividend of onepreferred share purchase right (a “Right”) for each outstanding share of common stock, par value $0.01 pershare, of the Company (the “Common Stock”) that was paid to the stockholders of record as of the close ofbusiness on January 30, 2009 (the “Record Date”). Each Right entitles the registered holder to purchase fromthe Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $0.01per share (the “Preferred Stock”) of the Company at a price of $25.00 per one one-thousandth of a share ofPreferred Stock (as the same may be adjusted, the “Purchase Price”). The description and terms of the Rightsare as set forth in the Rights Agreement.

The Rights Agreement is intended to help protect the Company’s tax net operating losscarryforwards. The Board of Directors may redeem the Rights, as discussed more fully below. The RightsAgreement is intended to act as a deterrent to any person (other than an Exempted Person (as defined below)or any person who has the status of a Threshold Holder (as defined below) on the date of the RightsAgreement so long as such person does not increase its ownership above an additional 1% of Company 382Securities (as defined below) then outstanding) from becoming or obtaining the right to become, a person whoor which, together with all affiliates and associates of such person, is the beneficial owner of 4.99% or moreof the shares of Common Stock or any other class of Company 382 Securities then outstanding (each suchperson, a “Threshold Holder”), without the approval of the Board of Directors.

Until the close of business on the earlier of (i) the tenth business day after the first date of a publicannouncement that a person (other than an Exempted Person (as defined below) or Grandfathered Person (asdefined below)) or group of affiliated or associated persons (an “Acquiring Person”) has become a ThresholdHolder or (ii) the tenth business day (or such later date as may be determined by action of the Board ofDirectors prior to such time as any person or group of affiliated persons becomes an Acquiring Person) afterthe date of commencement of, or the first public announcement of an intention to commence, a tender offeror exchange offer, the consummation of which would result in any person (other than an Exempted Person)becoming an Acquiring Person (the earlier of such dates being herein referred to as the “Distribution Date”),the Rights will be evidenced by the shares of Common Stock represented by the certificates for CommonStock or uncertificated book entry shares outstanding as of the Record Date, together with a copy of thesummary of rights disseminated in connection with the original dividend of Rights.

“Approved Acquisition” shall mean (i) any acquisition of Company 382 Securities that would causea person to qualify as a Threshold Holder and that is approved in advance by the Board of Directors, or (ii) aconversion (or other exchange) of Company 382 Securities for other Company 382 Securities where suchconversion (or other exchange) does not increase the beneficial ownership in the Company by any person forpurposes of Section 382 of the Internal Revenue Code of 1986, as amended.

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“Company 382 Securities” shall mean the Common Stock of the Company and any other interestthat would be treated as “stock” of the Company for purposes of Section 382 of the Internal Revenue Code of1986, as amended (including pursuant to Treasury Regulation Section 1.382-2T(f)(18)).

“Exempted Person” shall mean (i) the Company, (ii) any subsidiary of the Company, (in the case ofsubclauses (i) and (ii) including, without limitation, in its fiduciary capacity), (iii) any employee benefit planor compensation arrangement of the Company or of any subsidiary of the Company (iv) any entity or trusteeholding (or acting in a fiduciary capacity in respect of) Company 382 Securities to the extent organized,appointed or established by the Company or any subsidiary of the Company for or pursuant to the terms ofany such plan or for the purpose of funding any such employee benefit plan or compensation arrangement,(v) any person (together with its affiliates and associates) whose status as a Threshold Holder will, in the solejudgment of the Board of Directors, not jeopardize or endanger the availability to the Company of its netoperating loss carryforwards to be used to offset its taxable income in such year or future years (but in thecase of any person determined by the Board of Directors to be an Exempted Person pursuant to thissubparagraph (v) only for so long as such person’s status as a Threshold Holder continues not to jeopardize orendanger the availability of such net operating loss carryforwards, as determined by the Board of Directors inits good faith discretion), or (vi) any person who or which would qualify as a Threshold Holder as a result ofan Approved Acquisition and, to the extent approved by the Board of Directors, any person who or whichacquires Company 382 Securities from any such person.

“Grandfathered Person” shall mean any person who or which, together with all affiliates andassociates of such person, was as of the date of the Amended and Restated Rights Agreement, the beneficialowner of 4.99% or more of the Company 382 Securities outstanding on such date, unless and until such timeas such person after the date of the Rights Agreement acquires beneficial ownership of additional shares orother interests in Company 382 Securities representing more than 1% of the Company 382 Securities thenoutstanding. Any Grandfathered Person who, together with all of its affiliates and associates, subsequentlybecomes the beneficial owner of less than 4.99% of the Company 382 Securities shall cease to be aGrandfathered Person.

The Rights Agreement provides that, until the Distribution Date (or earlier expiration of the Rights),new Common Stock certificates issued after the Record Date will contain a notation incorporating the RightsAgreement by reference and, with respect to any uncertificated book entry shares issued after the Record Date,proper notice will be provided that incorporates the Rights Agreement by reference. Until the DistributionDate (or earlier redemption or expiration of the Rights), the Rights will be transferable only in connectionwith the transfer of Common Stock. Until the Distribution Date (or earlier redemption or expiration of theRights), the surrender for transfer of any certificates for shares of Common Stock (or uncertificated book entryshares) outstanding as of the Record Date, even without a notation incorporating the Rights Agreement byreference (or such notice, in the case of uncertificated book entry shares) or a copy of this Summary ofRights, will also constitute the transfer of the Rights associated with the shares of Common Stock representedby such certificate or uncertificated book entry shares, as the case may be. As soon as practicable followingthe Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed toholders of record of the Common Stock as of the close of business on the Distribution Date and such separateRight Certificates alone will evidence the Rights.

The Rights are not exercisable until the Distribution Date and will expire at the earlier of (i) theclose of business on December 6, 2014, (ii) the close of business on December 6, 2012 if shareholderapproval of the Rights Agreement has not been received by or on such date, (iii) at the adjournment of thefirst annual meeting of the stockholders of the Company following the date hereof if stockholder approval ofthe Rights Agreement has not been received prior to such time, (iv) the repeal of Section 382 or any successorstatute if the Board of Directors determines that the Rights Agreement is no longer necessary for the preservationof tax benefits or (v) the beginning of a taxable year of the Company to which the Board of Directorsdetermines that no tax benefits may be carried forward (the “Final Expiration Date”), subject to (x) the extension

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of Rights Agreement by the Board of Directors by the amendment of the Rights Agreement or (y) theredemption or exchange of the Rights by the Company, as described below.

The Purchase Price payable, and the number of shares of Preferred Stock or other securities orproperty issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution(i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the PreferredStock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for orpurchase Preferred Stock at a price, or securities convertible into Preferred Stock with a conversion price, lessthan the then-current market price of the Preferred Stock or (iii) upon the distribution to holders of thePreferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividendspayable in Preferred Stock) or of subscription rights or warrants (other than those referred to above).

The Rights are also subject to adjustment in the event of a stock dividend on the Common Stockpayable in shares of Common Stock or subdivisions, consolidations or combinations of the Common Stockoccurring, in any such case, prior to the Distribution Date.

Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Eachshare of Preferred Stock will be entitled, when, as and if declared, to a minimum preferential quarterlydividend payment of the greater of (a) $1 per share and (b) an amount equal to 1,000 times the dividenddeclared per share of Common Stock. In the event of liquidation, dissolution or winding up of the Company,the holders of the Preferred Stock will be entitled to a minimum preferential liquidation payment of $1,000per share (plus any accrued but unpaid dividends) but will be entitled to an aggregate 1,000 times thepayment made per share of Common Stock. Each share of Preferred Stock will have 1,000 votes, votingtogether with the Common Stock. Finally, in the event of any merger, consolidation or other transaction inwhich shares of Common Stock are converted or exchanged, each share of Preferred Stock will be entitled toreceive 1,000 times the amount received per share of Common Stock. These rights are protected by customaryantidilution provisions.

Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the value ofthe one one-thousandth interest in a share of Preferred Stock purchasable upon exercise of each Right shouldapproximate the value of one share of Common Stock.

In the event that any person or group of affiliated or associated persons becomes an AcquiringPerson, each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which willthereupon become void), will thereafter have the right to receive upon exercise of a Right and payment of thePurchase Price, that number of shares of Common Stock and/or other securities or property having a marketvalue of two times the Purchase Price.

In the event that, after a person or group has become an Acquiring Person, the Company is acquiredin a merger or other business combination transaction or 50% or more of its consolidated assets or earningpower are sold, proper provision will be made so that each holder of a Right (other than Rights beneficiallyowned by an Acquiring Person which will have become void) will thereafter have the right to receive, uponthe exercise thereof at the then-current exercise price of the Right, that number of shares of common stock ofthe person with whom the Company has engaged in the foregoing transaction (or its parent), which number ofshares at the time of such transaction will have a market value of two times the Purchase Price.

At any time after any person or group becomes an Acquiring Person and prior to the acquisition bysuch person or group of 50% or more of the outstanding shares of Common Stock or the occurrence of anevent described in the prior paragraph, the Board of Directors of the Company may exchange the Rights(other than Rights owned by such person or group which will have become void), in whole or in part, at anexchange ratio of one share of Common Stock, or a fractional share of Preferred Stock (or of a share of asimilar class or series of the Company’s preferred stock having similar rights, preferences and privileges) ofequivalent value, per Right (subject to adjustment).

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With certain exceptions, no adjustment in the Purchase Price will be required until cumulativeadjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of PreferredStock or Common Stock will be issued (other than fractions of Preferred Stock which are integral multiples ofone one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidencedby depositary receipts) and in lieu thereof, an adjustment in cash will be made based on the market price ofthe Preferred Stock or the Common Stock on the last trading day prior to the date of exercise.

At any time prior to the time an Acquiring Person becomes such, the Board of Directors of theCompany may redeem the Rights in whole, but not in part, at a price of $0.01 per Right, appropriatelyadjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of adoption ofthe Rights Agreement (the “Redemption Price”) payable, at the option of the Company, in cash, shares ofCommon Stock or such other form of consideration as the Board of Directors of the Company shalldetermine. The redemption of the Rights may be made effective at such time, on such basis and with suchconditions as the Board of Directors in its sole discretion may establish. Immediately upon any redemption ofthe Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be toreceive the Redemption Price.

For so long as the Rights are then redeemable, the Company may, except with respect to theRedemption Price, amend the Rights Agreement in any manner. After the Rights are no longer redeemable, theCompany may, except with respect to the Redemption Price, amend the Rights Agreement in any manner thatdoes not adversely affect the interests of holders of the Rights.

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as astockholder of the Company, including, without limitation, the right to vote or to receive dividends.

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission asan Exhibit to a Current Report on Form 8-K dated December 6, 2011. A copy of the Rights Agreement isavailable free of charge from the Company. This summary description of the Rights does not purport to becomplete and is qualified in its entirety by reference to the Rights Agreement, as the same may be amendedfrom time to time, which is hereby incorporated herein by reference.

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